Energy analysts suggest that Donald Trump’s re-election could bring a favourable climate for oil companies, but the potential geopolitical fallout could lead to major changes in oil prices. With expectations of deregulation, industry leaders are predicting a shift that could benefit oil producers, though they acknowledge possible challenges if tensions with countries like Iran escalate.
Trump 2.0 could be a mixed bag for oil industry
Patrick De Haan, head of petroleum analysis at GasBuddy, posted on X that Trump’s re-election would be “net [positive]” for the oil industry due to an anticipated rollback of stringent energy regulations.
De Haan warned that prices could rise if Trump re-imposes or intensifies sanctions on Iran, disrupting the country’s oil exports and tightening global supply. “Could be bad for prices,” De Haan noted, highlighting the potential for sanctions to place additional strain on global markets.
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Phil Flynn, a senior analyst at Price Futures Group and a FOX Business contributor, emphasized the potential impact of Iranian oil sanctions. Iran currently exports about 1.7 million barrels of oil per day, Flynn explained, adding that if these barrels are removed from global markets, “it is going to have to [be] made up somewhere.”
Flynn pointed to OPEC as a possible source for additional production, but if they cannot compensate, the burden may fall on the U.S. However, Flynn noted that “the lack of new leases and inflation makes it harder for U.S. oil and gas to fill that void,” as leasing and development for oil and gas on federally owned land have slowed down due to recent policies.
US refining capacity is also facing limits
Data from the Energy Information Administration (EIA) shows US’ refining capacity peaked in 2020 at 18.98 million barrels per day but then declined in 2021 and 2022. While the capacity has rebounded somewhat in 2023 and 2024, it has not yet returned to pre-pandemic levels and currently stands at around 18.38 million barrels per day. The recent closure of a Phillips 66 refinery in February has further reduced production, though this impact has not yet been reflected in the EIA’s annual data.
Flynn cautioned that if Iranian oil is removed from circulation, the “loss of Iranian barrels could lead to higher prices and could increase the global supply deficit.”
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Analysts predict that prices could eventually trend lower, though….
De Haan expressed scepticism about Trump’s campaign vow to halve energy prices, describing it as unrealistic. Instead, he forecasts that gas prices will remain close to $3 per gallon in the summer, dipping below $3 by the end of the year. “This seems to be the new norm,” De Haan noted, adding that if Trump were to simplify gasoline standards, it could potentially reduce costs further over time.
As of now, the national average for a gallon of regular gasoline sits at $3.12, down from $3.42 a year ago.