This is specifically a big issue to investors and traders because Trump’s energy policies could potentially transform the global oil market. From increasing the production of oil in the United States to maybe fuelling geopolitical rivalry, some of them may affect supply and demand in the global market.
When analysed closely, these shifts help investors to plan better and make wiser investment decisions. Now let’s figure out what this can imply about the oil market and invest in your portfolio.
Increased U.S. Oil Supply and Price Impact
Trump’s strategy to increase the amount of oil the U.S. produces by reducing the number of restrictions and increasing the amount of areas allowed for drilling, such as offshore oil rigs and federal land could overwhelm the global market with supply.
The US EIA expects total global oil production to be around 104.2 million barrel per day in 2025 with total demand of 104.7 million barrels per day. This may well lead to a rightward shift in the supply curve of oil and consequently put downward pressure on the price of oil.
In its latest report, Goldman Sachs expected Brent crude to average about $76 per barrel next year, compared with its previous estimate of $80 in 2024. On the same account, such a move might help traders to identify bearish patterns in the oil futures markets.
But, it is not all that black and white. Should Trump resume the sanctions on Iran it is possible to see the withdrawal of more than 1 million barrels per day from the market. This could counterbalance with the rise in the production of the U.S, therefore boosting price fluctuation.
Impact on Indian Oil and Gas Companies
India fulfills about 85% of its oil needs through imports thus the world oil prices remain an important consideration for the Indian economy and energy business. When the price of oil falls downstream companies which include refiners and marketers benefit, while those that may suffer include the oil explorers.
- Refiners Benefit from Cost Savings: For the refining companies such as IOC, BPCL, and HPCL lower crude rates imply lesser input costs and higher refining margins. They could translate it to better profitability and consequently better stock performance. To the traders, these firms may be interesting to invest during low oil price volatility because the prices will be likely to go up.
- Savings for the Indian Economy: They also come in handy in reducing India’s fiscal burden because the country has to import most of its oil. With every $10 per barrel decline in crude prices, the country is able to cut about $13 billion annually from its expenditure.
- Competition in LNG Market: Trump’s policies also consist of increased exports of US LNG that gives India more sources of importing the gas. This could translate into lower gas prices, but it also raises global rivalry, under which Indian authorities must be more flexible. It is for the investors to know the global LNG pricing trends, its changes, and how it affects Indian gas companies.
Opportunities for Traders and Investors
Fluctuations in oil prices create a number of opportunities that are accessible to traders and investors, in particular, in the futures market. Since prices are also likely to go up and down depending on geopolitical tension and supply shifts traders can exploit these changes to make necessary trades.
On the other hand, the investors may find the downstream companies such as the refiners ideal for investment because they are likely to succeed with low oil prices. The oil refining and marketing companies will benefit from the lower input costs improving the margins, stock returns.
This is complemented by India’s anticipated increase in oil demand expected to increase by 300,000 barrel per day in 2025. This steady demand due to transportation fuel is a forecast for refiners and marketers, hence investors are attracted to these segments.
For investors and traders, it is always important to monitor the international oil prices, especially the amounts produced in the United States and the geo-political risks. Selecting those companies that will gain from reduced crude prices including refiners and marketers can be balanced with higher risk firms in the upstream.