The Republican Party’s proposed shift to border-adjusted corporate tax (BTA) could have a significant impact on the global oil market, pushing US crude prices higher and triggering large-scale domestic production, said analysts at Goldman Sachs.
The border tax intends to boost US manufacturing by taxing imports while exempting US business export revenues from corporate taxation.
“If implemented, the impacts on the oil market would be significant,” Goldman said.
The switch to BTA would lift US crude futures 25 percent over global prices and provide an incentive for local producers to boost output.
“We expect WTI [US crude benchmark – Ed.] could move to a $10 per barrel premium to Brent from a $3 discount – a $13 (+25 percent) relative move immediately,” Goldman said.