The end of Russian oil: Will Trump's decision on drilling impact Russia's revenue?

"State of Emergency" in the U.S. Energy Sector: What Will Global Oil Prices Look Like

"America will once again become a manufacturing nation, and we will have what no other manufacturing nation will ever have: the largest amount of oil and gas of any country on Earth," Trump stated during his inaugural address.

This plan from Trump indicates a sharp turn in Washington's energy policy. Former President Joe Biden, on the other hand, spent four years encouraging a shift away from fossil fuels in the world's largest economy.

Trump's plan signifies a significant shift in Washington's energy policy

"It remains uncertain whether such grand plans from Trump will impact U.S. production, which has already reached record levels. Currently, drillers are 'chasing' high prices following sanctions against Russia due to its invasion of Ukraine in 2022," Reuters reports.

Later, Trump signed orders declaring a state of emergency in the energy sector and withdrawing the United States from the 2015 Paris Climate Agreement, an international pact aimed at combating global warming. He also endorsed the development of oil and gas in Alaska and stated that he expects a reduction in consumer energy prices and an improvement in U.S. national security by expanding domestic supplies and strengthening alliances.

"We will lower prices, refill our strategic reserves to the brim, and export American energy all over the world," Trump declared.

"Trump's attempts to reduce global oil prices should help him curb consumer inflation in the U.S. and thus please his electorate," explains Dmitry Churin.

"Drill, Baby, Drill!": What Awaits Russia's Shadow Fleet After Donald Trump's Directive

"We will drill, baby, drill," Trump said. In his inaugural speech, he also indicated that the U.S. will enter a new era of oil and gas exploration.

The implications of Trump's intentions and the prospects of his program for the world, as well as its consequences for Russia's shadow fleet

According to him, Ukraine should not relax, as fuel prices are not expected to drop in the medium term; instead, they are set to rise slightly in the next week or two.

The financial analyst and member of the Ukrainian Society of Financial Analysts, Andrey Shevchishin, also elaborated on Trump's intentions and the implications of his program for the world, as well as its effects on Russia's shadow fleet.

"This concerns the need to first replenish the U.S. oil reserve, which was depleted to stabilize prices, as well as increasing exports to global markets. In the long run, this could amount to 3 million barrels per day. For comparison, this is the volume currently exported by sea by all countries. This means they could fully cover the entire shadow fleet, all shadow sales, and the overall tanker volume currently offered by Russia," Shevchishin stated.

He also confirmed Dmitry Churin's remarks regarding the oil market's reaction, which indicates a decrease in prices. However, he attributed this not only to Donald Trump's statements but also to stabilization in the Middle East.

"In terms of market balance, such decisions from Trump will restrain global oil prices, and the U.S. will capture its market share, pushing out other countries. At the same time, they will negotiate to satisfy the curiosity of their partners. The U.S. is not a member of OPEC (the Organization of the Petroleum Exporting Countries), so any production freezes by this organization do not affect them. They will strictly pursue their own policy," Shevchishin said.

Under such a policy, the United States could even withdraw from the Free Trade Agreement, the expert suggests. Thus, these factors could potentially suppress the global economy, particularly affecting the economies of China and the EU.

The U.S. is not a member of OPEC, so any production freezes by this organization do not affect them. They will strictly pursue their own policy

"Under these conditions, there won't be a need for such a quantity of petroleum products and gas. Therefore, we might feel an additional trend toward price corrections due to insufficient demand," the analyst concluded.

The decline in oil prices will significantly impact Russia's revenues from raw material sales. Recall that, as reported by Reuters, in 2023, low oil prices and a decrease in gas exports reduced Russia's income from raw material sales by 24%. However, by the end of 2024, revenues in the Russian federal budget from oil and gas sales are expected to increase by more than 26% to 11.13 trillion rubles (approximately 108.22 billion dollars). If Donald Trump's plan works, the new oil prices should reduce the inflow of currency into Russia's budget. Moreover, Donald Trump and his team may intensify sanctions against Russia if it becomes clear that Putin will not agree to the "peace deal" proposed by Trump. This, in turn, should weaken the aggressor's position in the oil market and create new obstacles for obtaining billion-dollar revenues from crude oil trading.