Trump cant directly lower oil prices and one shouldn’t be misled into believing him if he says so.
Oil prices are simply a function of demand and supply. US and China are the largest consumers of crude demand and between the two it’s China that has been an overhang on crude demand, if not materially then at least sentiment wise.
On the supply side, US over the last few years have joined Saudi Arabia as a swing producer and US supply is something that Trump can influence. But again jury is divided as to how the US oil producers will respond to Trump’s lenient fiscal policies (tax cut etc). The reason the US production has been flat is simply because of shareholder activism that has put pressure on CEO’s to maximize return for the shareholders through higher dividends and buybacks and prudent investment in production growth.
Different extraction activities require different breakeven prices for them to be lucrative depending on geology and geography. Plus drilling activities can be influenced by other factors than just purely oil prices.
That’s why one needs to take a granular view of the market, supply chain and eocsystem set up to properly evaluate different companies in this space.
| Subscribe To Our Free Newsletter |
