Higher Shale Output
Trump also promised to raise shale oil production. Shale oil producers, who were facing tough environmental regulations under outgoing President Barack Obama, are poised to experience new conditions after the victory of Trump who advocates energy independence in the US.
It seems that Trump's election pledge for increasing shale oil production with a view to creating thousands of jobs and cutting oil dependence on other countries is facing challenges. The US may be the third largest producer of oil thanks to its shale oil deposits, but this trend has run into trouble in recent years due to the sharp decline in oil prices. The perspective of shale oil production and expansion is now shrouded in ambiguity. Although Trump promised to increase shale oil production, this policy will not succeed in case oil prices do not grow. The current oil price is not economical for shale oil production and this issue poses an obstacle to increased oil production.
Therefore, even if under Trump restrictions for drilling federal lands are lifted to help the US become independent in energy supply the US will still face challenges for shale oil extraction.
Conflicting Policies
A study of Trump's oil pledges and policy indicates that their materialization would be facing numerous challenges. That would hamper US energy policies for some time. Of course it seems that such a trend will not last long and will be as short-lived as Trump's election win shock. In the US, Trump has vowed to spend revenue from energy generation for building schools and public infrastructure. That would probably lead to higher oil supply and subsequently lower prices. However, it would not last long because it would reduce the profitability of shale oil production.
Trump is likely to reduce the growth of global demand for oil in the world by pursuing his specific economic policies. For instance, Trump maintains that the banking interest rate in the US is very low. In case he moves to raise the banking interest rates the world will witness a growth in the dollar index. As a result, such commodities as oil that are traded in the US dollars in global markets will cost higher for non-American customers. In the end, demand for oil will decline and oil prices will drop.
Meantime, Trump is likely to adopt new international policies in a bid to increase oil prices. In this regard, one of Trump's likely policies would be lack of commitment to Iran's nuclear deal with six world powers, dubbed the Joint Comprehensive Plan of Action (JCPOA). That would create tensions at international level and affect global oil prices.
The policies announced by Trump are somewhat contradictory. Some of them would boost supply and reduce prices while some others would reduce supply and boost prices. Now, one has to wait and see how Trump would push ahead with policies he announced in the run-up to the November 8 presidential election. Each policy would drive global energy markets to a different situation.
Furthermore, another point that must be taken into consideration is that Trump or any other US president would not be the sole determining factor in the world energy markets. In other words, changes in the US will only be one of factors affecting global energy markets and there are other factors involved in this sector.
For instance, in case oil surplus supply goes on the outcome of US presidential election would not largely affect the price of this commodity. In return, in case OPEC developments and its proposed output freeze are followed up on seriously they will be more influential on world markets.