Following President Donald Trump’s impending return to the White House, oil market participants are eagerly anticipating what lies ahead.
That’s what an oil market update from Mukesh Sahdev, Rystad Energy Global Head of Commodity Markets – Oil, stated, adding that the U.S. political system is at a tipping point.
“Donald Trump’s second term [is] poised to either bring substantial shifts in U.S. policy or reinforce continuity – both alternatives carrying far-reaching implications for global oil markets in 2025,” the update, which was sent to Rigzone recently by the Rystad team, noted.
“Regardless of geopolitical uncertainties and the recent election outcome, persistent trends in oil markets are likely to shape the outlook ahead,” it added.
OPEC+ is likely to continue adjusting market management by directly influencing crude supply and indirectly managing product supply, according to the update.
“OPEC+’s main strategy seems to be keeping the crude market in a backwardation structure, where prompt prices are higher than futures,” it said.
“This market structure allows OPEC+ to manage financial market dynamics and limit producer hedging, giving the group more control over market direction. OPEC+ is likely to continue this approach, ensuring that prompt crude prices stay above futures,” it added.
The update noted that OPEC+ is not overly concerned about non-OPEC growth, “as U.S. shale production has slowed and growth is now lower than historical levels”.
“Additionally, the quality of U.S. shale oil is becoming lighter, which presents challenges for refineries in both the U.S. and Europe, particularly as the petrochemical market faces weaker demand,” it highlighted.
The update also pointed out that Brazil is increasing its oil production. It noted, however, that in the event of a significant market downturn, it is possible that Saudi-led OPEC+ could ask Brazil to join the cuts, as Brazil is a member of the BRICS group.
“Overall, OPEC+ is in a strong position, controlling the right quality of crude and holding important downstream assets in the Middle East, with stakes in Asian markets, particularly China,” the update stated.
“The stability OPEC+ has maintained, even in a geopolitically challenging year, is notable,” it added.
The update also noted that trade flows are likely to stay impacted, with inefficiencies hampering an easier balancing of supply and demand tensions.
“The supply and demand for oil has certainly remained impacted by a weaker macro-economic post-Covid recovery,” it said.
“Geopolitical conflicts have significantly altered trade flow volumes and routes towards higher costs and ineffective balancing of stress in supply and demand balances,” it added.
“Longer routes in a backwardated marked with high interest rates has further eroded market balancing across regions,” it continued.
The big shifts through the year have been the routing of Russian crude and product flows towards Asia, routing of crude and products via the southern tip of Africa due to disturbances in the Red Sea, altered flows through the Strait of Hormuz, and longer flows from Russian products heading to South American countries, the update stated.
“These changes are unlikely to resolve easily as the duration of disruptions has been lengthy and supply chains have become entrenched with new market players in the trading segment,” it warned.
In a gas and LNG market update sent to Rigzone on Monday, Rystad Vice President Kaushal Ramesh said, “initial market reactions have been muted to Trump’s election victory, but in the medium term, he is expected to reinforce the U.S.’ role as a leading oil and LNG exporter”.
“For now, reactionary weather preparedness measures are driving market movement through year’s end, leaving 2025 still up in the air,” Ramesh added.
The U.S. election took place on November 5. Donald Trump won this election with 312 electoral votes to Kamala Harris’ 226, RealClearPolitics and 270towin, which both describe themselves as non-partisan, show. The total number of electoral votes is 538, with a minimum of 270 needed for a majority, the National Archives and Records Administration (NARA) website outlines.
In an address to the nation on November 7, which was made available on the White House website, President Joe Biden said, “Yesterday, I spoke with President-elect Trump to congratulate him on his victory”.
“I assured him that I would direct my entire administration to work with his team to ensure a peaceful and orderly transition. That’s what the American people deserve,” he added.
“Campaigns are contests of competing visions. The country chooses one or the other. We accept the choice the country made. I’ve said many times you can’t love your country only when you win. You can’t love your neighbor only when you agree,” he continued.
IPAA, NOIA, AXPC, AEA Reaction
Commenting on the results of the 2024 presidential election, Independent Petroleum Association of America (IPAA) President and CEO Jeff Eshelman said in a release sent to Rigzone, “the Independent Petroleum Association of America, advocating for thousands of oil and natural gas producers that develop 90 percent of wells nationwide, congratulates President Donald J. Trump on winning another presidential term”.
“IPAA appreciates President Trump’s commitment to energy leadership and security, and we look forward to working with him and his administration on the issues important for sustained oil and natural gas production in the United States,” he added.
“In 2025, our association’s priorities include equitable tax policies for energy businesses, sensible environmental regulations, access to federal lands and waters, infrastructure permitting including Liquified Natural Gas (LNG) facilities, and access to capital,” he continued.
“We aim to have a dialogue with the incoming administration on these issues and the necessity for reliable and affordable energy for the American people,” Eshelman went on to state.
In another release sent to Rigzone, Erik Milito, President of the National Ocean Industries Association (NOIA), said, “NOIA congratulates President-elect Trump on his election victory and looks forward to working with his administration and the incoming Congress”.
“The U.S. offshore energy industry is an irreplaceable asset, providing homegrown energy security, jobs, economic opportunities, and billions in government revenue,” he added.
“Moreover, the Gulf of Mexico provides a crucial geopolitical counterbalance to nations like Iran and Russia, reinforcing America’s energy independence and global influence,” he continued.
“It is not just an economic powerhouse but also a key player in providing lower-carbon energy solutions … With its vast potential for carbon sequestration, the Gulf is essential for efforts to reduce emissions and decarbonize hard to abate industries,” Milito went on to state.
“By championing innovative offshore energy policies that foster continued development, we can drive meaningful energy progress that benefits all Americans, regardless of political party,” Milito said.
In a separate release sent to Rigzone, American Exploration & Production Council (AXPC) CEO Anne Bradbury said, “congratulations to President-elect Donald Trump and Vice President elect J.D. Vance on your election victory”.
“America’s oil and natural gas producers look forward to working with the incoming Trump administration and the 119th Congress to ensure that the United States – through sensible legislation and regulations – remains energy dominant and can provide the American people and the world with affordable, reliable, ever-cleaner energy,” Bradbury added.
In another release sent to Rigzone, American Energy Alliance (AEA) President Thomas Pyle said, “congratulations to President Donald J. Trump on his election victory”.
“Throughout his campaign, President Trump expressed his unabashed support for American energy. He promised to embrace domestic oil and gas production, lower energy and electricity prices, and undo the inflationary Biden-Harris Green New Deal policies,” he added.
“That’s because President Trump understands that affordable and reliable energy is critical to our economic well-being and our national security,” he continued.
“We look forward to working with President Trump to unleash our energy potential, preserve the right for Americans to choose the types of cars and trucks that best suit our needs, and unwind the Biden-Harris administration’s regulatory onslaught on American energy producers,” Pyle went on to state.
Following Trump’s election victory, Alex Stevens, Manager of Policy and Communications at the AEA, told Rigzone, “President Trump’s victory underscores the vital role that oil, natural gas, coal, and nuclear play in our energy mix and their importance in driving economic growth”.
“As demand for fuels and electricity continues to grow, it is critical that we create a policy environment that empowers energy producers to meet this need,” he added.
“We expect President Trump to pursue a broad deregulatory agenda once again, and roll back the costly taxpayer-funded subsidies, ensuring that American families and businesses have reliable access to these essential resources for the long term,” he noted.
“For the energy industry, this means a renewed focus on increasing production and fostering innovation, rather than navigating the maze of regulations imposed by Washington,” Stevens concluded.
To contact the author, email andreas.exarheas@rigzone.com