Standard Chartered (StanChart) analysts challenge President Trump's assertion that increased U.S. oil production will lead to a manufacturing renaissance and a significant impact on global oil markets. They argue that the U.S. oil supply curve is likely to remain high and steep, contradicting Trump's view of a readily available and low-cost supply.
President Trump's executive order titled 'Unleashing American Energy ,' signed on January 20, emphasized oil's vital role in restoring U.S. economic and military security. The order portrays oil as an abundant, low-cost resource hindered by regulations, asserting that its release will fuel a manufacturing renaissance fueled by the cost advantage of cheap oil.
However, commodity analysts at Standard Chartered (StanChart) challenge Trump's view, arguing that several assumptions underpinning his stance on U.S. oil are flawed. \StanChart contends that the U.S. oil supply curve is unlikely to be as low and elastic as Trump suggests, highlighting its inherent high and steep nature. The analysts point to the 2024 slowdown in U.S. oil production growth, which they predict will continue for the next two years, contradicting the notion of an inevitable supply glut. This slowdown, they attribute primarily to non-OPEC supply growth, which plummeted from 2.46 mb/d in 2023 to 0.79 mb/d in 2024, mainly due to a reduction in overall U.S. liquids growth. \StanChart further emphasizes the substantial impact of U.S. policy, particularly regarding sanctions enforcement, on Iran's oil output. The firm notes that historical turning points in Iran's production trajectory have coincided with shifts in U.S. policy. While the Biden administration has allowed Iran's exports to increase in recent years, viewing them as a price moderating factor, the Trump administration's approach is expected to be more stringent, aiming to drive Iran's exports to zero. This aligns with Trump's broader trade policy agenda against China, which has been importing Iranian oil indirectly through proxies. The recent intensification of sanctions by the Biden administration, freezing ships involved in these transfers, has already led to a decline in China's imports of Iranian crude oil.
United States Oil Energy Policy Trump Administration Iranian Oil Exports Supply And Demand Global Markets
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