Chaos on the oil markets – Trumps Trades War also touches oil companies

Donald Trump can call himself a fan of the ‘fossil’ industry – on Wednesday he still signed a decree for the sale of « Beautiful, clean coal » give an impulse. But whether love is mutual, becomes more unlikely by the day. The global trade war that Trump has unleashed, the oil and gas industry is hard in its wallet. The irritation with the oil bosses would be behind the scenes rise high, according to American media.

Since halfway through last week, oil prices have collapsed worldwide. A barrel of Brent oil, the most important indicator for Europe, yielded ‘only’ 59 dollars this Wednesday-more than 20 percent less than last week. Another important oil price in the west, the WTI, has even fallen by almost a quarter. That naturally reduces the profits of the oil companies.

The most important explanation for these enormous price falls: The extreme levies that Trump has introduced against China can cause a recession in the world’s largest oil consumer, economists fear. And then there is also much less demand for oil, which presses the prices.

To make matters worse, the cartel of oil -producing countries, OPEC, has also just increased production. This threatens to create a generous offer.

For the wind

Good news for car drivers perhaps, the gasoline prices will fall as a result. But the oil price is (already) so low that it is no longer possible for American oil companies to make returns on new oil projects, say experts in local media. And that is remarkably enough, partly due to other taxes that Trump has introduced, on the import of steel. They make the construction of new oil installations considerably more expensive (up to 20 percent). So on the cost side there is also a problem.

The relatively favorable situation for oil companies has been reversed within a few days

The suspected result: the “Drill Baby, Drill!« Call that Trump has been taking on the address of oil companies since he has been appointing, will now be completely ignored.

In fact, the relatively favorable situation in which oil companies were turned around in a few days. In recent years, they have been doing well, especially since the energy crisis of 2022, when prices booked the air in shots and oil companies. The prices had been calmed down lately, but remained relatively high ($ 70 to 80).

Partly for this reason (and because the energy crisis would have shown that there was not enough affordable renewable energy), many oil and gas companies were even full on the ‘fossil organ’, and they put green plans in the refrigerator.

Now that seems like an expensive gamble. Of course, some oil companies themselves also realize that oil is ‘finite’. For that reason, Shell and BP also focus strongly on gas, which they see as ‘transition fuel’. But also the gas prices are fell sharplybecause of the same recession fears. There too, the returns are under pressure, in short.

No wonder that the stock prices of all oil and gas companies were under heavy pressure in recent days. The Shell share lost 16 percent of its value in five days. BP lost 20 percent, Exxon 15 and Chevron 18.

Good news for Russia?

For the energy transition, the falling prices are also ‘bad news’, says Olof van der Gaag from the Dutch Association of Sustainable Energy. Although oil companies will make less margin, their turnover will probably rise, because cheaper oil encourages extra demand. Van der Gaag points out that « fortunately the costs of electric cars also fall ». This is mainly because more and more are being made of it, and manufacturers are therefore becoming increasingly efficient when putting together those cars. They ‘learn’ through experience.

A final remarkable side on the price decreases that Trump has caused: prices for Russian oil are also falling sharply. This is important because Western companies are not allowed to insure ships that transport Russian oil that is more expensive than $ 60 per barrel. Those ‘price cap‘ Shortly after the Russian invasion of Ukraine, it was more difficult to make Russian oil companies to transport and therefore sell their oil. Now that Russian oil can in principle be insured again and be exported more easily.

On the other hand: the Russian Central Bank warned Wednesday that the lower oil prices are a problem for the Kremlin anyway.

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