“We are going to have a government that will work with the American industry gaz and oil, and will not call them profiteers or price manipulators like Biden did”reacted Andy Lipow, analyst at Lipow Oil Associates.
“We look forward to working with him and his administration on important issues relating to sustainable U.S. oil and gas production.”commented Jeff Eshelman, director of the professional organization Independent Petroleum Association of America (IPAA).
“I will lower the price of energy”promised Donald Trump during the Republican convention. “We’re going to drill like crazy.” The real estate developer accused President Joe Biden of muzzling the oil sector, preventing it from producing at full capacity. “But producers choose not to exploit large deposits” in the United States on purpose, recalls Stewart Glickman of CFRA.
“The problem is not regulation, it’s the markets”abonde Bill O’Grady, de Confluence Investment Management. “The shareholders (of the oil companies) do not want (to see them increase their production) because they value their profits.“
The United States is already producing record volumes of oil every week. An increase in production would thus create an excess of barrels on a market which is already worried about abundant supply while demand is uncertain, particularly in China. All of this could depress prices even further than they already are, especially since, at the same time, economists expect the dollar to appreciate.
Saudi Arabia to “good memory”
The emergence of shale oil and gas at the turn of the 2010s shook up the American black gold industry.
Worried about the growing power of the United States, Saudi Arabia decided to retaliate by flooding the oil market, causing the price of a barrel of West Texas Intermediate (WTI), the American benchmark, to fall by up to $26 in 2016. . A strategy that proved risky, even for Middle Eastern oil producers.
It nevertheless created a shock wave within the shale oil industry, causing the bankruptcy of many companies. “They have good memories and don’t want to relive that”explique Stewart Glickman.
“I don’t think anyone (in the industry) is strategizing to meet a political agenda”warned Darren Woods, CEO of ExxonMobil, on Friday.
For Stewart Glickman, Donald Trump does not have the means to constrain the oil majors and can only act “like the other managers did before him. When prices rise, bring in the bosses and try to intimidate them into producing more.”
“I think they will achieve their goals”nevertheless believes Bill O’Grady about the Trump government, and “increase production and lower prices”. The analyst expects a WTI price of 50 dollars, compared to more than 70 currently.
Stakeholders see another reason for anxiety for the sector, namely the massive customs duties that Donald Trump intends to impose on goods from several major trading partners of the United States, in particular China.
“This would slow economic growth both in the United States and the rest of the world, which would reduce demand for refined products, pushing prices down.”warn Wood Mackenzie analysts.
In the longer term, Donald Trump’s desire to reverse many of the measures taken by the Biden government to fight climate change and promote the energy transition could nevertheless give new impetus to fossil fuels, according to Stewart Glickman.
“We can imagine that prices will rise again” in the long term due to a slowdown in the development of renewable energies and the consequences of current underinvestment in the oil and gas industries, which were said to be doomed in the medium term.
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