The influence of rhetoric: Is Trump's new oil strategy effective?

In an interview with a correspondent from Kazinform News Agency, experts expressed skepticism about the success of President Donald Trump’s plan to saturate the global market with cheap oil.

The influence of rhetoric: Is Trump's new oil strategy effective?
Collage credit: Kazinform; ratel.kz; weproject.media

An oil superpower?

President Trump has outlined his key energy policy objectives—strengthening the U.S. economy through increased oil and gas production. His strategy involves supplying cheap oil and liquefied natural gas not only to the American market but also globally. However, the U.S. is already producing oil at its maximum capacity, and the long-term sustainability of this trend remains uncertain.

According to oil and gas expert Askar Ismailov, achieving this goal would require the U.S. to invest in drilling at a minimum and, at worst, in geological exploration and field development.

“If drilling new wells takes one to two years, full-scale exploration and development typically require up to five years. This means Trump cannot flood the world with oil within his current presidency. As a result, we shouldn’t expect sharp price fluctuations in the global market due to increased U.S. production. There may be a slight increase in output, but OPEC remains capable of managing such challenges and maintaining price stability,” Ismailov commented.

Financial analyst Arman Baiganov of R-Finance agrees that U.S. oil production is likely to rise.

“Trump may be aiming to support traditional oil extraction methods. Given this, there is a high probability of increased production, particularly in the shale oil sector. Trump might simplify licensing procedures and relax certain environmental restrictions, which could boost production not only in the U.S. but in other countries as well,” he said.

Arman Baiganov
Photo credit: Screenshot

Baiganov also warns of a potential imbalance: if the U.S. significantly ramps up production, it could impact oil prices. However, since American oil is costly to extract, any price decline would likely be short-lived.

Ora Lazic, a senior consultant on global commodity markets at Kpler SAS (London), believes the U.S. cannot become an oil superpower.

“The U.S. simply lacks the capability. They have shale oil and gas reserves, but refining shale oil is difficult, forcing America to export it. Not all refineries can process any type of crude, as oil quality varies by region. Even if the U.S. rapidly increased shale oil production, it wouldn’t be enough to supply global energy needs,” she explained.

Lazic also noted that the U.S. lacks sufficient oil export infrastructure, which is costly to develop.

Currently, four major projects are being considered for new offshore oil export terminals, with investment costs ranging from $1 billion to $3.6 billion. However, these projects have not yet been approved by licensing agencies or environmental authorities.

“According to forecasts from the International Energy Agency (IEA) and S&P Global, oil production in the U.S. is declining not only due to depleting reserves but also due to decreasing demand. Therefore, it is unlikely that anyone would invest in constructing large capital-intensive projects for a period of 2–3 years, or even 5–10 years. Such projects require a guarantee of profitability over a 20–30 year period,” the speaker explained.

Furthermore, some executives of major U.S. oil companies have already dismissed the idea of “flooding the world with American oil” emphasizing that oil extraction is far more challenging than making political promises.

Economists estimate that for oil companies to remain profitable, crude prices need to be at least $45–$50 per barrel. Despite Trump’s rhetoric about large-scale production, oil prices have dropped, currently standing at around $75 per barrel.

Impact of lower oil prices

Speaking at the World Economic Forum in Davos, Trump urged European allies to increase military spending, promised to protect American industries with tariffs, and suggested that lower oil prices could help end the conflict in Ukraine.

However, expert Askar Ismailov doubts that declining oil prices will lead to an end to the conflict.

“Military actions depend more on political will and available resources. Trump might be implying that lower oil prices would hurt Russia’s economy, which heavily relies on oil and gas exports. While reduced oil revenues could limit Russia’s military financing, they won’t be enough to stop the conflict,” Ismailov noted.

Askar Ismailov
Photo credit: Ratel.kz

He also pointed out that lowering oil prices requires global coordination, which is unlikely given that OPEC—including Russia—actively regulates supply to maintain stable prices. Additionally, Russia has already adapted to sanctions.

Paradoxically, a significant drop in oil prices could hit U.S. shale oil companies the hardest, leading to a sharp decline in domestic production.

Can OPEC withstand the pressure?

Trump previously stated his intention to ask OPEC and Saudi Arabia to lower global oil prices to expedite the resolution of the Russia-Ukraine conflict. The U.S. also aims to exert greater control over oil pricing through increased production. Some analysts speculate whether Saudi Arabia might leave OPEC in response.

Currently, the Middle East is witnessing extensive oil exploration projects.

“From a market perspective, Saudi Arabia must control production growth. The UAE and Saudi Arabia determine oil prices by balancing supply and demand. Currently, there isn’t significant demand for oil, with the key markets being Europe, China, and a few Southeast Asian countries. Since global oil demand remains unstable, major producers like the UAE, Saudi Arabia, and Iraq must adjust accordingly. I believe the U.S. and Saudi Arabia will find common ground, but this doesn’t mean America can dictate oil policy without considering OPEC countries,” said Lazic.

Ignoring the U.S. isn’t an option for OPEC members, as they compete in the same markets. However, rather than extracting large amounts of cheap oil, it is more economically viable to produce less and sell at higher prices, ensuring profitability.

Ora Lazic
Photo credit: Weproject.media

Askar Ismailov dismissed the idea of an OPEC breakup.

“Saudi Arabia is currently the biggest advocate for high oil prices, as its budget heavily depends on oil revenue. I see no reason why the Saudis would leave OPEC. Even if they did, it wouldn’t lead to OPEC’s collapse. Other major players would still hold significant market shares. Even without Saudi Arabia, OPEC would still control about 30% of global oil production, which is substantial,” he explained.

Azerbaijani economist Natig Jafarli noted that long-term forecasts about oil depletion have proven incorrect.

“Currently, the world produces about 102-103 million barrels per day, matching global consumption. A decade ago, some predicted that oil production would fall to 60-65 million barrels per day by 2030. However, recent projections from international organizations and oil companies suggest that demand will actually rise to 105 million barrels per day by 2030 and remain stable until 2050,” Jafarli said.

 Natig Jafarli
Photo credit: Natig Jafarli's personal archive

U.S. trade policy with the EU

At the Davos forum, Trump warned that companies moving production abroad would face financial consequences. He promised the lowest taxes for businesses operating in the U.S., potentially reducing the corporate tax rate from 21% to 15%.

Ismailov noted that in the short term, tariffs could shield American manufacturers from cheap imports. However, they might also raise prices for U.S. consumers and weaken export-driven industries.

“Whether ordinary Americans will support this remains to be seen. Companies like Apple and Tesla, which rely on global supply chains, may face rising costs and be forced to localize production—something that aren’t always economically feasible,” he said.

Ora Lazic emphasized that Trump’s rhetoric doesn’t necessarily indicate major economic or political reforms in the oil and energy sectors.

“The U.S. is a democracy—if industries refuse to comply with new tariffs, they will relocate production elsewhere. So, Trump’s words shouldn’t be taken literally. Some of his plans might materialize, but implementing them within a few years or even his presidency is unlikely,” she argued.

Lazic warned that imposing tariffs could put the U.S. in a difficult position since many American manufacturers operate overseas.

“Mexico accounts for about 70% of U.S. trade, with China and the EU making up the rest. If the U.S. imposes trade barriers, the EU could respond with reciprocal tariffs. If the final product becomes too expensive, consumers will stop buying it. Every economy depends on consumer spending,” she concluded.

Summarizing expert opinions, if the U.S. focuses on expanding oil drilling, it may harm itself more than the global market.

Earlier, it was reported that Kazakhstan plans to increase oil processing to over 28 million tons per year. The Ministry of Energy of the Republic of Kazakhstan has announced its intention to significantly expand the country’s oil production capacity.

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