As the U.S. prepares for a potential second Trump administration, global energy markets are bracing for policy shifts that could introduce volatility.

Trump’s prior tenure emphasized deregulation, energy independence, and aggressive trade negotiations. While he aims to lower energy prices, geopolitical and economic realities may drive conflicting outcomes. This article analyzes three key factors that will shape energy prices and the economy in 2025 and beyond. 

Geopolitical Factors and Energy Security 

Trump’s “America First” energy strategy will likely impact global trade and diplomatic relations, particularly with major oil-producing and consuming nations

• Russia and Ukraine: Since the onset of the Ukraine war, Russia has faced sanctions that significantly disrupted its energy sector. In 2023, Russian oil exports declined by 6.5%, with over 90% of sales redirected to China and India. The G7 and EU imposed a price cap of $60 per barrel to limit Russian revenues. If Trump lifts these sanctions, Russian oil could re-enter Western markets, increasing global supply but only marginally. However, a sanction-free Russia could also sell its crude at full price, potentially pushing global oil prices higher. 

• Middle East: Trump has historically maintained close ties with Saudi Arabia while advocating for a hardline stance on Iran. His administration previously withdrew from the Iran nuclear deal, reinstating sanctions that cut Iran’s oil production from 3.8 million barrels per day (bpd) in 2018 to 1.93 million bpd by 2020. As of early 2025, production has rebounded to 3.28 million bpd, with China being a primary buyer. If Trump reinstates strict sanctions, this could remove a significant volume from global supply, leading to price hikes. 

• Latin America: Venezuela’s oil sector remains constrained by U.S. sanctions. While the Biden administration relaxed some restrictions in 2023, Trump’s foreign policy advisors advocate for renewed economic pressure. If Trump reinstates full sanctions, Venezuela’s exports—estimated at 850,000 bpd—could be further reduced, tightening global supply. 

Domestic Oil & Gas Production: Limited Growth Prospects 

While Trump has historically promoted domestic energy production, post-pandemic market realities suggest limited upside: 

• Rig Count Trends: In January 2020, the U.S. had 796 active rigs, but this number plummeted to 251 by mid-2020 due to COVID-19 disruptions. While there was partial recovery, reaching 584 rigs in early 2025, this remains significantly below pre-pandemic levels, reflecting industry caution. 

• Industry Consolidation: Companies have shifted focus from expansion to profitability, leading to major mergers. Recent deals include Diamondback Energy’s $4.08 billion acquisition of Double Eagle and Chevron’s $53 billion purchase of Hess. These moves indicate a preference for efficiency over high-risk exploration. 

• Long-term Investment Concerns: E&P companies are wary of investing in new projects that may not yield returns before the next regulatory shift. The industry remains cautious, prioritizing financial discipline over aggressive drilling expansion. 

Trade & Tariff Implications for Energy Markets 

Trump’s previous tariff policies disrupted global trade, and a renewed trade war could further complicate energy flows: 

• Canada & Mexico: In 2023, the U.S. imported 6.5 million bpd of crude oil, with Canada supplying nearly 60% and Mexico contributing about 10%. Any tariff adjustments under USMCA could impact refining operations, particularly in the Midwest, which relies heavily on Canadian crude. 

• China: In 2024, China imported 11.1 million bpd of crude oil, with 555,000 bpd coming from the U.S.. Additionally, China imported 77 million tonnes of LNG, with 1.6 million tonnes from the U.S. If tariffs escalate, China could reduce its dependence on U.S. energy exports, redirecting purchases to Middle Eastern and Russian suppliers. A renewed trade war could increase inflationary pressures in the U.S. and disrupt energy trade flows, raising costs for consumers. 

• European Union & Latin America: Tariff escalations could disrupt biofuels, crude oil, and LNG exports. Brazil and Argentina, key suppliers of ethanol and natural gas, may seek alternative buyers if tariffs become too restrictive. The EU, a major consumer of U.S. refined petroleum products and LNG, may also impose countermeasures. If retaliatory tariffs are introduced, U.S. energy producers could face reduced market access and increased production costs, leading to further price volatility. 

Navigating Market Uncertainty 

A second Trump administration is expected to introduce volatility into global energy markets through deregulation, foreign policy shifts, and trade disputes. While lifting sanctions on Russia could increase oil supply and lower prices, aggressive stances on Iran and Venezuela may counteract this effect.

Domestically, despite Trump’s push for increased production, industry consolidation and cautious investment strategies limit rapid growth. Meanwhile, renewed tariffs on Canada, Mexico, China, and Latin America could disrupt energy trade, leading to higher costs and market realignments. 

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