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Trump's Influence On Oil Economy

Blog Post created by akriti19 on Jan 10, 2017

As the new U S president elect Mr. Donald Trump takes his seat, all of us might be pondering about the impact and influence that his government will make on the current world's oil economy as US is one of the major game changer. Well from a point of view of a petroleum engineer, his arrival is expected to further increase the  oil production by US which will add on to the already flooded oil market. Not only does the president-elect want to remove the shackles on oil by rolling back regulations, but he wants to unleash America's natural resources by expanding drilling on federal land.

 

"America's incredible energy potential remains untapped," Trump said in a May speech, adding that the problem is "totally self-inflected."

Following is a list of some policies that the Trump's government applies on the US oil economy:

  1. Cutting Red Tape: Trump has made it no secret that he wants to deregulate the fossil fuel industry. That could include repealing EPA regulations on methane emitted during oil drilling and other rules that make it less enticing to drill in the U.S.Encouraging more drilling could worsen the oversupply problem that sent oil prices spiraling lower to just $45 a barrel today from about $110 two years ago.
  2. Its just about drilling: Trump targets to lift the restrictions on the US federal lands in Gulf of Mexico and Arctic so as to establish oil rigs over there for production purposes. That could help further curb U.S. reliance on foreign oil -- a major goal of Trump -- but hurt prices by encouraging unneeded supply.
  3. Putin- A good friend: Unlike the previous president, the new one is believed to have healthy relationships with the Russian president. RBC predicted the president-elect will revoke sanctions that were placed on Russia after its military actions in Crimea and Ukraine. Doing so could boost Russia's already-robust oil production since some of those sanctions prohibit technology and services that support the Russian energy industry. 
  4. Strong dollar, weak oil: The U.S. dollar has flexed its muscles since Trump's election, hitting a 13-year high on Wednesday. If that trend continues, it could be bad news for oil prices because crude trades in U.S. dollars.
  5. A big NO to Iran deal: The Iranian deal has allowed to inundate the oil market with million barrels of oil per day. But Mr. Trump has clearly discouraged the deal stating it as the "disastrous".  This could be a paramount step towards oil price boost.

So,these are some of the policies that are expected to alter the oil market scenario but still there is no clear indication of how these measures would affect the economy on a global scale. Thus, it is well said :

Donald Trump is a double-edged sword for oil

Let us all hope for the best.

 

Reference: CNN MONEY

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