Energy analysts say former President Donald Trump’s reelection could provide a potential tailwind for oil companies despite concerns that geopolitical tensions could lead to potential price increases I predicted.
Patrick de Haan, head of petroleum analysis at GasBuddy, wrote in a post on X that Trump’s re-election is a “real positive” for oil companies as the industry expects tougher regulations to ease.
But he also said that if President Trump tightens or adds sanctions against Iran, “that could have a negative impact on prices.”
Phil Flynn, senior analyst at Price Futures Group and contributor to FOX Business, said Iran exports about 1.7 million barrels a day, and President Trump has imposed sanctions on those barrels. “If that happens, we’ll have to make up for it somewhere,” he said. ”
Mr. Flynn said OPEC could support production, but if not, it would be up to the U.S. to fill the gap.
He noted how the U.S. government leases federal land for oil and gas development, saying, “With new leases and a lack of inflation, U.S. oil and gas will fill the void.” “It’s becoming difficult,” he added.
According to the Energy Information Administration (EIA), U.S. refining capacity peaked in 2020 and then declined in 2021 and 2022.
Production capacity increased in 2023 and 2024, but has not returned to pre-pandemic levels.
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For example, refining capacity in 2020 was 18.98 million barrels per calendar day.
This figure will be approximately 18.38 million barrels per calendar day in 2024.
Phillips 66 suspended oil refining operations at the facility in February, according to the EIA, but that is not yet reflected in the annual data.
“With global supplies well below average, losses in Iranian barrels could lead to higher prices and widen global supply shortages,” Flynn added.
Still, both analysts expect a decline in prices to come.
DeHaan doesn’t think President Trump’s promise to cut energy prices in half is “realistic,” but he said prices will hover around $3 a gallon in the summer and by the end of the year, I expect it to drop below $3.
“This appears to be the new normal. President Trump may choose to simplify gasoline standards, which could help ease prices in the long run,” DeHaan wrote.
The average cost of a gallon of regular gasoline is now $3.12, down from $3.42 reported a year ago.
Mr. Flynn warned that while geopolitical risk factors could cause prices to rise, a stronger U.S. dollar and expectations for increased U.S. drilling are “almost immediately driving down energy costs.”
