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Investing.com – Former President Donald Trump’s energy agenda, punctuated by the slogan “boro, baby, bore,” promised reduced regulatory hurdles, increased fossil fuel production and lower oil prices. property.
However, the reality of US energy production remains based on economic decisions made by independent producers rather than political mandates. These companies, accountable to their owners, must assess the dynamics of the global market when considering whether to increase drilling activity.
To follow Wells Fargo (NYSE:) analyst Ian Mikkelsen, although deregulation in the oil and gas sector is likely under the Trump administration, the extent and impact of these changes remains uncertain. The process of amending the regulations may face delays and competition from other legislative priorities.
In addition, a small Republican majority in Congress could limit the scope of the reforms.
“One area that may be easier to address is the permit process for drilling on state land,” says Mikkelsen.
The Biden administration, in 2021, implemented tough policies on hiring and permitting and raised production wages, which led to a sharp decline in the issuance of new drilling contracts. Reducing this process would reduce operating costs for companies operating on federal lands, which account for 12% of US offshore oil production.
Due to the current lack of clarity regarding potential scope for deregulation, Wells Fargo is maintaining its existing options within the energy sector.
Notably, the firm continues to recommend Integrated Oil and Midstream Energy companies for investors seeking exposure.
Oil prices rose on Wednesday as the market focused on potential supply disruptions caused by US sanctions targeting Russian energy companies and Russian waste tankers.
In its monthly oil market report released on Wednesday, the International Energy Agency (IEA) highlighted the potential impact of the latest sanctions, noting that they could significantly disrupt oil supplies. Russian oil and distribution. The agency added that “the full impact on the oil market and access to Russian supplies is uncertain.”
Sanctions concerns appear to be boosting prices, along with expectations of a possible reduction in US oil inventories this week.
The key issue remains how much Russian supply will be removed from the world market and whether other sources or measures can compensate for any resulting shortages.
Meanwhile, OPEC projects that global oil demand will increase by 1.43 million barrels per day in 2026, maintaining the same growth rate as expected in 2025.
The statement is consistent with OPEC’s long-term outlook, which expects oil demand to continue to grow over the next two decades. This is in contrast to the IEA’s view, which predicts that demand will rise within a decade as the global transition to clean energy accelerates.
