"Storm, baby, storm!": Where Trump's energy policy will lead

The new US President Donald Trump, who took office on January 20, immediately declared a state of emergency in the American energy sector, signed a number of decrees aimed at supporting oil and gas production, and declared the need to double energy production. In his opinion, this is necessary both to meet domestic demand and for EXPORT supplies “to the entire world,” which Washington is ready to guarantee for “hundreds of years.”

Trump essentially expresses Washington's new energy policy in his speeches with one phrase: "Drill, baby, drill!" The president expects that the plan will allow the United States to "become a rich country again," "lower prices on virtually all goods and services," and achieve the status of a "manufacturing superpower" and "the capital of artificial intelligence and cryptocurrency."

Following this plan, already on the first day of his presidency, Trump announced the encouragement of exploration and production of energy resources on federal lands and the lifting of the ban on leasing new areas of the continental shelf for drilling (it was established by former White House chief Joe Biden in early 2025). The US Department of Energy, in turn, resumed consideration of applications for LNG exports to countries with which Washington does not have free trade agreements (this process was also suspended by Biden). These include, for example, CHINA or the EU states.

At the same time, Trump announced his intention to ask Saudi Arabia and OPEC to lower pricesoil . The new HEAD of the White House believes that this is also necessary to influence RUSSIA and resolve the conflict in Ukraine . Oil prices reacted nervously to the words of the American president and fell below $79 per barrel. However, in the past, Trump has repeatedly called on OPEC+ to change its policy of regulating the oil market, to no avail. And the Kremlin has already stated that the conflict does not depend on oil prices.

Experts interviewed by RBC note that Trump’s desire to reduce prices contradicts his intention to multiply energy production.

The United States is already the world’s largest oil producer, but also its largest consumer. According to the Energy Information Administration (EIA), the United States produced a record 13.2 million barrels per day (bpd) of oil in 2024 , of which only a quarter was exported; another 6 million bpd was imported . By comparison, Saudi Arabia and Russia produced about 9 million bpd, but exported about 6 million and 5 million bpd, respectively.

The United States regained its status as the world's leading oil producer in 2019, during Trump's first presidential term. From 2017 to 2019, average daily production increased by 2.95 million barrels, to 12.3 million barrels, but fell to 11.3 million barrels in 2020 due to the covid-19 pandemic. The increase in production was facilitated by both the lifting of the 40-year embargo on US oil exports in 2016 and the rise in world market prices due to the OPEC+ deal that began in 2017.

According to the EIA forecast, in 2025, oil production in the US will continue to grow moderately - up to 13.5 million barrels per day, which will slow down in 2026 and amount to less than 1%, increasing the total oil production figure to 13.6 million barrels per day. The Institute of Energy and Finance (IEF) expects that the increase in oil production in 2025 will amount to 600-700 thousand barrels per day, that is, "approximately at the level of 2024 or slightly lower." "The fact that Trump came to power will not change the rate of production growth in the US in 2025," says Alexey Belogoryev, Research DIRECTOR at the IEF. He believes that the efforts of the American president can stimulate oil and gas production only in three to four years.

At the same time, experts still doubt the effectiveness of the measures introduced so far. "The ban on exploration and production on federal lands was introduced under Biden only because this ban could not affect anything. The lifting of the ban by Trump will affect the situation in the US oil industry to the same extent," said Alexander Frolov, Deputy Director General of the Institute of National Energy.

Stock market expert at BCS World of Investments Lyudmila Rokotyanskaya reminds us that the US's ability to increase production will be linked to many factors, including legal ones. "This week, the media reported that the reversal of the previous president's decisions may have to be defended in COURT. Moreover, developing deposits in Alaska and the Arctic requires many years of effort and capital investment. And there are no guarantees yet that the next president will not reverse Trump's decision for environmental reasons," she says.

Analysts agree that the main driver of rapid growth in oil production in the US can only be high prices, which, in turn, contradicts Trump's promises to reduce quotes. "Referring to the scenario forecasts of the US Energy Information Agency, we see that a significant increase in oil production (about 7 million barrels per day by 2030) is possible only in the scenario of high oil prices (more than $100 per barrel)... And since we do not expect significant energy-intensive growth of the global economy, a significant increase in oil production in the US will only happen if the country refuses oil from Venezuela, CANADA and Mexico - in this case, it will be necessary to satisfy domestic demand," says Maria Belova, research director at Implementa.

To increase production, American oil producers need to make significant investments that will only pay off at high prices, reminds Maxim Malkov, head of the practice for providing services to oil and gas companies at Kept. At the same time, a significant increase in production will lead to an excess of supply on the global oil market and lower prices, which remains a “fundamental contradiction” of the American oil industry, he adds. “Among the world’s oil producers, only Saudi Arabia, Russia and some other OPEC and OPEC+ countries have significant free capacity in production, which allows them to increase production without excessive costs,” he concludes.

Over the past decade, the world has twice seen a sharp increase in production in the US lead to a drop in prices, after which American companies themselves began to experience difficulties, Frolov recalls. “In this sense, the room for maneuver in the country is extremely limited, because production is expensive. Moreover, in 2024, the shale gas segment began to decline for the first time. And the problems began due to a protracted period of low prices,” the expert concluded.

Increased geopolitical tensions could support oil prices and mitigate the risk of creating a supply surplus on the global market. For example, the US has the option to tighten sanctions against Iranian, Russian and Venezuelan oil, says Rokotyanskaya, or the trigger could be a long-term closure of the Strait of Hormuz and oil supplies from the Middle East, adds Belova. "Under other circumstances, the US will not be able to increase oil production without creating a supply surplus in the world, and, consequently, a drop in oil prices. Which, in turn, will negatively affect the economy of American mining companies," Belova noted.

At the same time, expectations of anti-Iranian sanctions are already partially priced into current world prices, Belogoryev believes. In addition, Trump promises to replenish the US strategic oil reserve, which was depleted in 2020–2023, to the limit, he adds. According to IEF estimates, the measure will create about 200,000 barrels per day of additional demand, or 300,000–400,000 barrels per day if the US president “tries to manage in two or three years.” Such a volume is quite large and is taken into account by the market, Belogoryev says. “Trump’s tariff policy may also contribute to price growth, in particular, if he fulfills his promise to increase the import duty rate for Canada, the main source of heavy oil imports to the US, to 25%,” the expert notes.

The forecast for the balance of supply and demand for this year is shifted towards a surplus, notes Rokotyanskaya. OPEC+ no longer has the ability to balance this surplus and further reduce oil production, Belogoryev notes. "Accordingly, prices should go down: if we put aside geopolitics, then, in my opinion, they would have gone into the $60-70 per barrel corridor in the second half of the year," he believes. However, the latest US sanctions against Russia may contribute to the loss of some Russian barrels from the world market, which may offset the surplus forecast for this year, Rokotyanskaya notes. "This should support the Brent price at current levels. However, the effectiveness of the sanctions and whether Russia will be able to quickly find ways to bypass them are still uncertain," she adds.

"The paradox of Trump is that he constantly talks about his desire to reduce oil prices, but most of the foreign economic and foreign policy measures that are associated with him and that he himself voices lead to their growth," Belogoryev summarizes. According to his estimates, in the scenario of moderate strengthening of sanctions, the average annual price of Brent in 2025 will remain close to current values, that is, will be in the range of $75-80 per barrel. If sanctions are sharply tightened, which is less likely, then quotes will rush to $90 per barrel, he believes.

The US is also the world's largest LNG exporter, Belova reminds. And even without taking into account the plants currently awaiting export licenses, the country's production potential will at least double in the next five years, to around 200 million tons. "This will lead to increased competition in the market, and therefore, unfortunately, we should expect new sanctions against Russian LNG," she believes.

In terms of gas, including liquefied gas, it is important to remember that the American domestic market is one of the largest in the world, so total exports account for no more than 20% of domestic production, Malkov notes. At the same time, each additional cubic meter of LNG exports is a withdrawal of gas from the American consumer, whose demand is growing strongly due to the electric power industry, he adds. "Under these conditions, increasing the production and export of LNG may lead to a gas deficit in the US domestic market, and therefore to higher prices, because the growth rate of domestic production will not keep up with the growth rate of demand. In 2024, gas production in the US even decreased compared to 2023. For example, Australia and Indonesia have already faced similar difficulties," the expert notes.

The more gas the US exports, the more the prices in Europe and Asia influence the prices within the country, Frolov continues. For extractive companies, such a relationship may be advantageous. But in reality, equalizing the prices with the importing regions will lead to an increase in the cost of various energy-dependent products and a decrease in the competitiveness of the US economy as a whole, he believes.

According to IEF estimates, in 2025, gas production in the US may increase by about 15 billion cubic meters compared to the same period last year. At the same time, against the backdrop of slowing domestic demand, the entire increase will come from LNG exports. Average annual spot gas prices in Europe and Asia in 2025 will be 10-12% higher than in 2024. “By the end of 2025, prices should begin to decline due to the expected onset of excess LNG supply on the global market. But this may be hindered for a short time by weather conditions and problems with replenishing reserves in EU UGS facilities in the warm months of 2024. Gas prices in the US may increase most significantly in 2025 due to the internal balance - by about a third compared to the 2024 level,” Belogoryev concludes.

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