(BOE Report) – President Donald Trump has lavished the U.S. oil industry with favourable policies since returning to the White House, but his twin demands for cheap oil and “energy dominance” are increasingly colliding with companies’ bottom lines.
Over the past year, the Republican president has rolled out numerous pro-fossil fuel measures and offered strong support for U.S. oil firms abroad, a sharp departure from his Democratic predecessor Joe Biden’s focus on combating climate change. Within hours of taking office, Trump declared a national energy emergency, opening the way to relaxed environmental rules and expanded drilling permits on federal land and in Alaska. He also quickly lifted Biden’s freeze on permitting new liquefied natural gas (LNG) terminals and sped up project approvals.
The policies are set to reinforce America’s status as the world’s largest oil and gas producer. U.S. crude oil and liquids production is projected to hit a record of nearly 24 million barrels per day in 2026, accounting for 22% of global supply, according to the Energy Information Administration. What’s more, the U.S. in 2025 became the first country to export more than 100 million metric tons of LNG in a single year, powered by production from new plants.
But the industry’s early enthusiasm for Trump’s “drill, baby, drill!” ethos has been tempered by his push for low energy prices and his appeals to the Organization of the Petroleum Exporting Countries to increase output. OPEC+, which includes Russia, sharply raised production targets throughout the year, sending U.S. benchmark crude to a near five-year low of $55 a barrel in mid-December. The price drop, and expectations of a future global supply glut, pushed U.S. drillers to scale back operations, with the domestic oil rig count falling 15% over the past year, according to energy service provider Baker Hughes. That pullback is set to slow the pace of U.S. output growth this year and next.
ENERGY DOMINO
At the same time, Trump has used America’s oil and gas strength to advance his “energy dominance” agenda and the so-called Donroe doctrine, his rebranding of a 19th-century principle asserting U.S. influence over the Americas. The administration has wielded its oil and LNG wealth in negotiations intended to narrow trade imbalances with dozens of countries. Some counterparties, such as the European Union, have agreed to aggressive and unrealistic supply commitments that risk making buyers wary of depending heavily on the U.S. for vital energy. The centrality of oil in Trump’s strategy was made crystal clear when U.S. forces captured Venezuelan President Nicolas Maduro in early January on drug trafficking charges, prompting Trump to quickly announce that Washington would indefinitely take control of the oil riches of a country home to the world’s largest proven reserves – some 300 billion barrels. In a televised White House meeting with oil executives on January 9, Trump declared that his administration would soon name the companies that will be asked to invest a combined $100 billion to rebuild Venezuela’s derelict oil industry. But it is far from clear if top companies such as Exxon Mobil or Chevron would commit to investing heavily in the Latin American country, given immense political and economic risks and long-standing doubts about the attractiveness of developing its oil resources. Exxon CEO Darren Woods underscored this at the White House meeting, calling Venezuela “un-investable” and citing the company’s history of being forced out of the country twice in recent decades. Trump bristled at Woods’s remarks, calling them “too cute,” adding later that he was inclined to keep Exxon out of the country.
Defying Trump therefore risks meaningful backlash.
THE BEAR HUG
Venezuela may become a template for Trump’s broader use of U.S. oil companies as geopolitical instruments.
He could, for example, attempt to draw them into Russia as part of a sweeping deal to end Moscow’s nearly four-year-long full-scale invasion of Ukraine.
But deeper government involvement in commercial decision-making carries major risks for the financial integrity of these firms. More broadly, the growing volatility of U.S. politics – under both Democrats and Republicans – poses increasing risks for the industry, as successive administrations reverse or discard their predecessors’ policies, particularly those enacted through executive orders rather than legislation. In short, the more friendly Trump’s policies are towards the oil sector today, the greater risk there is of significant whiplash if an environmentally focused administration comes into office.
Trump’s embrace of the oil industry was widely welcomed after what many companies viewed as Biden’s relative hostility. But his strongman style risks turning that warm embrace into a bear hug.
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(Ron Bousso Editing by Marguerita Choy)
