My Take on President Trump's impact on oil prices - June 18

[dan_s]

I've seen lots of opinions recently that if Trump is elected president, it will be bearish for oil prices. WTI might dip to $70, but I doubt the oil price will "crash" in 2025 if he is elected.
First let me say that I care more about my country than I do about the oil price. Another four years of Team Biden will be a disaster.

1. "Drill Baby Drill" would increase oil supply and lower oil prices, BUT IT WILL NOT HAPPEN QUICKLY. Upstream companies know that their share prices will be hammered if they do so. Plus, lower oil prices will shrink the development drilling locations that are economical. The Permian Basin does have more upside, but outside of the Permian development will go down quickly if oil prices decline. There is also a shortage of skilled workers in the oilfield, making it difficult to ramp up drilling programs.

2. Peace between Russia and Ukraine sounds bearish for oil if sanctions against Russia are lifted, but Russian oil sales volumes have not been impacted very much by the sanctions because China and India are buying all the oil Russia will sell them at lower prices. If Russia can raise their oil price, won't it put upward pressure on the overall oil market price?

3. IMO Trump will immediately enforce sanctions on Iran and probably on Venezuela. Enforcement of sanctions against Iran will more than offset the price impact of 1 & 2 above.

4. My guess is that Trump will also refill the SPR.

5. Trump knows that The Green New Deal is total BS. A "Common Sense Energy Plan" is going to be bullish for oil and gas.

6. President Trump will be extremely bullish for the U.S. natural gas and NGL markets; those prices are already heading higher. Trump will fast track LNG export facility approvals and new pipelines. Demand for U.S. natural gas could be 30 Bcfpd higher by 2030 if our government just gets out of the way. Trump knows we must rebalance our trade deficit.

My Conclusion: For U.S. and Canada upstream companies, any decline in the oil revenues related to President Trump will be offset by sanctions against Iran and increased natural gas and NGL prices.