Oil prices rose more than 2% on Monday, with Brent futures topping $40 a barrel, after Joe Biden clinched the U.S. presidency and buoyed risk appetites, offsetting worries about the impact on demand from the worsening coronavirus pandemic.

Brent crude futures for January climbed 94 cents, or 2.4%, to $40.39 a barrel by 0710 GMT, while U.S. West Texas Intermediate crude for December was at $38.07, up 93 cents, or 2.5%.

Oil recovered from a 4% decline on Friday, rising along with other financial markets after Biden emerged as the winner in the U.S. presidential race on Sunday. Meanwhile, the dollar weakened, boosting commodities priced in the greenback as they became more affordable for investors holding other currencies.

“Trading this morning has a risk-on flavor, reflecting increasing confidence that Joe Biden will occupy the White House, but the Republican Party will retain control of the Senate,” Michael McCarthy, chief market strategist at CMC Markets in Sydney.

“The outcome is ideal from a market point of view. Neither party controls the Congress, so both trade wars and higher taxes are largely off the agenda.”

U.S. President-elect Biden and his team are working on tackling the worsening health crisis. The United States became the first nation worldwide since the pandemic began to surpass 10 million COVID-19 infections, according to a Reuters tally on Sunday.

“There will be some repercussions further down the road,” said OCBC’s economist Howie Lee, raising the possibility of lockdowns in the United States under Biden.

“Either you’re crimping energy demand or consumption behavior.”

Separately, U.S. oil production is set to climb as producers are tapping into a backlog of drilled wells left uncompleted to boost output. The number of operating oil and gas rigs in the United States rose for an eighth week last week, according to Baker Hughes.

Key members of the Organization of the Petroleum Exporting Countries (OPEC) are wary of Biden relaxing measures on either Iran or Venezuela in years to come, which could mean an increase in production that would make it harder to balance supply with demand.

ING analysts said the return of Iranian oil supply is more likely to happen at end-2021 or in 2022.

OPEC and its allies, a group known as OPEC+, are cutting output by about 7.7 million barrels per day to balance global oil markets.

China, the world’s top crude importer, posted a 12% decline in October imports compared with September.

This data may be bearish for global commodity markets, said OCBC’s Lee: “China might be near the end of what it needs in the raw commodity form given the amount of stockpiles that it has.”

Some analysts, however, expect imports to rise into 2021 after Beijing increased quotas by 20%.

(Reporting by Florence Tan; Editing by Gerry Doyle, Tom Hogue and Kim Coghill)

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