Investing.com – Former President Donald Trump’s energy agenda, embodied in the slogan “Drill, Baby, Drill,” promised lower regulatory barriers, increased fossil fuel production, and lower commodity prices.
However, the reality of energy production in the United States remains rooted in economic decisions made by independent producers rather than political directives. These companies, accountable to their shareholders, must weigh global market dynamics when considering increased drilling activity.
according to Wells Fargo (NYSE:) analyst Ian Mikkelsen said while it is likely that deregulation in the oil and gas sector will occur under the Trump administration, the scale and impact of these changes remains uncertain. The process of amending regulations may face delays and competition from other legislative priorities.
In addition, Republicans’ narrow majority in Congress may limit the scope of reforms.
“One area that might be relatively easy to address is the permitting process for drilling on federal lands,” Mikkelsen points out.
In 2021, the Biden administration implemented stricter federal leasing and permitting policies and raised production royalties, resulting in a notable decline in the issuance of new drilling leases. Simplifying this process could reduce operational costs for companies operating on federal lands, which account for about 12% of onshore oil production in the United States.
In light of the current lack of clarity regarding the potential scope of deregulation, Wells Fargo maintains its current preferences in the energy sector.
More specifically, the company continues to recommend integrated oil and midstream energy companies to investors looking for exposure.
Oil prices rose on Wednesday as market attention turned to potential supply disruptions caused by US sanctions targeting Russian energy companies and tankers transporting Russian crude.
In its monthly oil market report issued on Wednesday, the International Energy Agency highlighted the potential impact of the latest sanctions, noting that they could significantly disrupt oil supply and distribution in Russia. The agency added, “The full impact on the oil market and on access to Russian supplies is uncertain.”
Concerns about sanctions appear to be supporting prices, along with expectations of a possible drawdown of US oil inventories this week.
The key issue remains the extent to which Russian supply is removed from the global market and whether alternative sources or measures are able to compensate for any resulting shortfall.
Meanwhile, OPEC expects global oil demand to rise by 1.43 million barrels per day in 2026, maintaining a growth rate similar to what was expected in 2025.
These forecasts are consistent with OPEC’s long-term expectations, which expect oil demand to continue to grow over the next two decades. This contradicts the view of the International Energy Agency, which expects demand to peak during this decade as the global transition to clean energy accelerates.
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