With Donald Trump returning to office as the 47th President of the United States, global oil markets are bracing for a potential shift similar to the energy policies he implemented during his first term. Trump’s push for increased U.S. oil production had a significant impact on global oil dynamics, including for countries within OPEC, particularly Nigeria.
Trump’s Policies to Boost U.S. Oil Production
Trump’s administration made energy independence a key goal, focusing on increasing U.S. oil output. This was achieved through deregulation and encouraging more domestic drilling, especially in shale regions like the Permian Basin. By the end of his first term, U.S. production surged to over 13 million barrels per day, turning the country into a net oil exporter. This growth in production was part of his strategy to reduce dependence on foreign oil while positioning the U.S. as a dominant player in the global energy market. Trump argued that this would strengthen the U.S. economy and provide energy security by reducing reliance on OPEC nations
The Impact on OPEC and Nigeria
As U.S. production ramped up, global oil prices faced downward pressure due to oversupply, challenging OPEC’s ability to manage prices effectively. Saudi Arabia, the leader of OPEC, found itself having to adjust production cuts to stabilize prices. For Nigeria, which is heavily reliant on oil exports, the increased U.S. output meant greater competition for market share. This was evident when oil prices peaked at $86 per barrel in 2018, before dropping significantly, with prices reaching as low as $20 per barrel in early 2020, driven by the combination of excess U.S. production and the economic downturn caused by the COVID-19 pandemic.
What Could Happen If Trump Pushes for Increased Oil Production Again?
With Trump back in the White House, the question now is whether he will reignite his policies to boost U.S. oil production. If he does, the U.S. could see another surge in output, which would likely continue to put pressure on global oil prices. This could result in a further decline in oil prices, potentially leading to levels below $60 per barrel, a scenario that would be particularly damaging for Nigeria. A country, which depends heavily on oil revenue, would struggle to maintain its economic stability if prices were to remain depressed.
OPEC members, especially those with higher production costs, would also face difficulties managing price stability if U.S. production continues to increase. The already fragile cohesion within OPEC could be further tested, as countries like Saudi Arabia and Russia work to balance production cuts with the increasing output from the U.S.
Price Predictions for Oil
Under Trump’s second term, oil prices could face significant downward pressure. If U.S. production increases to its previous highs, oil prices could struggle to exceed $70 per barrel in the short to medium term. For Nigeria, oil prices below $60 per barrel would continue to strain its economy, highlighting the ongoing vulnerability of oil-dependent countries in a rapidly changing global energy landscape.
Trump’s return to the presidency could lead to a renewed push for increased U.S. oil production, which would disrupt OPEC’s ability to control supply and maintain higher prices. For countries like Nigeria, which rely on oil revenues, this could result in lower oil prices and reduced market share, further challenging economic stability. As Trump’s energy policies continue to shape global oil markets, Nigeria’s struggle to diversify away from oil will likely intensify, underscoring the importance of reducing dependency on crude oil exports.
