Drill, baby, drill? Unpacking Trump’s oil and gas agenda By Investing.com

Investing.com – Former President Donald Trump’s energy agenda, underpinned by the slogan “dig, baby, dig,” promised to reduce regulatory hurdles, increase fossil fuel production and lower commodity prices.

However, the reality of U.S. energy production remains dependent on economic decisions made by independent producers, not political dictates.These companies, which are accountable to their shareholders, must weigh global market dynamics when considering increasing drilling activity.

By: Wells Fargo (NYSE:) analyst Ian Mikkelsen, while some oil and gas deregulation is possible under the Trump administration, the scale and impact of these changes remain uncertain.

Moreover, a narrow Republican majority in Congress could limit the breadth of reforms.

“One area that can be relatively easy is the permit process for drilling on federal land,” Mikkelsen notes.

The Biden administration implemented stricter federal leasing and permitting policies in 2021 and increased production royalties, leading to a significant reduction in the issuance of new drilling leases. Streamlining this process could reduce operating costs for companies operating on federal lands that make up the U.S. coast approximately 12% of oil production.

In the absence of current clarity on the potential scope of deregulation, Wells Fargo maintains its existing preferences in the energy sector.

More specifically, the firm continues to recommend Integrated Oil and Midstream Energy for investors looking for exposure.

Oil prices rose on Wednesday as the market focused on potential supply disruptions stemming from US sanctions targeting Russian energy companies and tankers carrying Russian oil.

In its monthly oil market report released on Wednesday, the International Energy Agency (IEA) highlighted the potential impact of the latest sanctions, saying they could significantly disrupt Russian oil supply and distribution is uncertain.”

Sanctions concerns appear to be driving prices, along with expectations of a possible cut in U.S. oil inventories this week.

The main question remains how far Russian supply will be removed from the world market and whether alternative sources or funds can compensate for the resulting shortfall.

Meanwhile, OPEC predicts that global oil demand will grow by 1.43 million barrels per day in 2026, maintaining the growth rate expected in 2025.

This forecast is in line with OPEC’s long-term outlook, which expects oil demand to continue to grow over the next two decades.This contrasts with the IEA’s view that demand will peak during this decade as it accelerates. the global transition to clean energy.