Just 100 days into President Donald Trump’s second term, U.S. oil prices have declined more than 20%, slipping below the breakeven point for many domestic producers. This downturn is challenging the administration’s agenda for U.S. energy dominance and exposing vulnerabilities in policy direction. Benchmark crude has fallen to around $60 per barrel, the lowest since the COVID-19 crisis, and well under the $65 level many producers need for profitability.
Trump, who began his term with bold initiatives to expand domestic energy production, implemented protectionist trade policies that have ultimately weakened global oil demand forecasts. On April 2, dubbed “Liberation Day,” Trump announced a minimum 10% tariff on imports. This move sparked expectations of a global economic slowdown and triggered significant market unease. Energy experts point to policy unpredictability and trade barriers as key factors eroding investor confidence, an essential pillar of energy dominance.
The administration’s foreign policy has added further pressure. Sanctions targeting Iranian oil, including penalties on China-based facilities, were introduced to curb Tehran’s nuclear ambitions and funding of militant groups. While these sanctions gave short-term support to oil prices, they also heightened global market uncertainty. In response, major forecasting agencies, including government bodies and international organizations, have revised down their oil price and demand projections.
In addition, OPEC+ chose to accelerate production increases in the spring, deepening the price slump. Ironically, Trump had previously urged OPEC to reduce oil prices, a stance that now conflicts with the resulting consequences for U.S. producers. Domestic output, which stood at 13.4 million barrels per day in April, is now projected to reach only 13.5 million bpd in 2025—lower than earlier estimates. Some producers are already slowing new drilling projects, unwilling to navigate the market under uncertain policy signals.
Despite the challenges in oil, liquefied natural gas (LNG) has seen growth. Trump reinstated LNG export approvals on his first day, after a freeze under the previous administration. This sparked new investments, including a $17.5 billion LNG project by Australia’s Woodside Energy. U.S. LNG exports are expected to hit 15.2 billion cubic feet per day by 2025, exceeding prior projections. However, tariffs on steel and aluminum could increase infrastructure costs.
Trump’s broader energy strategy has favored fossil fuels, scaling back regulations and withdrawing from global climate agreements. Yet, despite efforts to revive coal, economic realities and utility company strategies suggest its decline will continue.
READ MORE: