With the onset of the second term of President Donald Trump’s administration, uncertainty has loomed large across various global sectors, and energy markets are no exception. Just days into his presidency, Trump’s actions and statements have stirred significant unrest within the energy industry. His dual approach to promoting U.S. energy dominance while pushing for lower global oil prices has raised questions about the coherence of his policies.
On his first day in office, Trump wasted no time in pursuing his long-standing campaign slogan “Drill, baby, drill,” signing an executive order aimed at expanding drilling on federal lands and ramping up the processing and refining of raw materials, including vital minerals. He declared a “national energy emergency” to fast-track energy projects, claiming that the U.S. possesses “more oil and gas than anybody” and that the country must rapidly tap into its resources. His calls to boost production reflected his belief that the U.S. should be a global energy leader, tapping into what he described as “liquid gold under our feet.”
Alongside this push for increased domestic energy production, Trump also took controversial steps by pulling the U.S. out of the Paris Climate Agreement and withdrawing subsidies for electric vehicles, pivoting his administration’s focus entirely toward fossil fuels. The moves received backing from traditional energy sectors but also raised alarm among environmental advocates.
However, Trump’s energy policies have taken a contradictory turn. While advocating for energy independence, President Trump also issued threats against key international oil producers. During his tenure, he repeatedly emphasized tariffs, particularly against Canada, Mexico, and China. Speculation that the U.S. might slap tariffs on Canadian oil exports, especially on crude oil shipments to the U.S., has increased, with February 1 cited as a potential starting date for these punitive measures.
In a remote address at the World Economic Forum in Davos, Trump took a direct swipe at Canada’s role in the U.S. oil supply chain. “America doesn’t need Canada for critical imports,” he stated. However, industry experts, such as Richard Masson from the University of Calgary’s School of Public Policy, disagreed, pointing out the U.S.’s reliance on Canadian oil, particularly diluted bitumen, a type of crude that is processed at specific U.S. refineries. Masson warned that imposing tariffs on Canadian energy exports could drive up domestic gasoline prices in the U.S. and hinder Trump’s broader agenda of energy dominance.
Furthermore, the president’s call for the OPEC+ alliance, which includes countries like Saudi Arabia and Russia, to cut oil prices adds another layer of inconsistency to his approach. During his Davos speech, Trump urged Saudi Arabia and other OPEC members to bring down oil prices to pressure Russia into peace talks over the ongoing war in Ukraine. He directly accused Saudi Arabia and OPEC of prolonging the conflict by keeping prices high.
But oil-producing countries, already facing economic pressure, are unlikely to comply with such demands. Many OPEC members, including Saudi Arabia, need higher oil prices to balance their budgets, and reducing prices could undermine their financial stability. Additionally, reducing output could strain relations with Russia, a key partner in the OPEC+ alliance.
Experts, including Heather Exner-Pirot from the Business Council of Canada, believe that Trump’s conflicting demands—urging OPEC to lower prices while pushing for energy dominance—are incompatible. She pointed out that these contradictory policies reveal a lack of clarity and consistency in U.S. energy policy, leaving markets uncertain about the direction of the future.
The impact of these conflicting signals is already being felt in global oil markets. After four consecutive weeks of gains, Brent crude oil fell by 2.8% and WTI dropped by 4.1% in the previous week, signaling growing concerns among investors. Analysts suggest that while Trump’s push for energy independence may drive short-term gains in U.S. production, his calls for lower oil prices may hinder the growth of American oil production, particularly from costlier shale sources.
As President Trump continues to open multiple fronts in energy policy, the world watches closely, awaiting clarity on his approach. Until the direction of these policies becomes clearer, markets will likely remain volatile, and confusion could continue to reign in the global energy sector.