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One of the campaign promises of President Donald Trump was to secure affordable energy for Americans. Even at the time, this promise put him at odds with the oil industry, already suffering from low oil prices. Now, the rift has deepened as the prospect of cheap Venezuelan crude pressures everyone but Big Oil. Thankfully for the industry, geopolitics still plays a role in price-setting. It’s good news for oil producers and bad news for consumers.

Almost every oil market forecaster predicted prices would go even lower this year than they were in 2025, when the benchmarks shed around a fifth of their value. Brent crude was forecast at an average of below $60, with West Texas Intermediate seen closer to $50, and possibly even falling below that level over the course of the year.

Another thing that forecasters agreed on was that such low prices would prompt a production response from non-OPEC countries, notably the United States. Shale drillers, who are responsible for the bulk of U.S. oil output, would find it hard to make ends meet at $50 or less per barrel so they would start curbing production, the argument went. It is a solid argument, based on historical evidence. Yet producers’ reaction would lead to higher oil prices, and that would go against President Trump’s campaign promise to Americans.

It was a risky proposition from the start, at least for the independent oil companies in the shale patch and outside it. Big Oil is not called Big Oil for nothing – it can survive low oil prices for much longer than independents. But for independents, Trump’s promise to jumpstart a revival in oil and gas—which had never stopped growing, by the way—has been a mixed bag. Sure, his federal government started making life easier for oil and gas companies from day one, easing the regulatory burden on the industry and opening up new acreage for exploration. But that promise of cheap oil has made it difficult for industry players to enjoy those changes.

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It is not just U.S. industry players, by the way. The sustained decline in oil prices last year pushed capital expenditure on exploration and production lower than it had been in 2024. This year, upstream capex is also seen booking a decline on 2025, according to Wood Mackenzie. Notably, the energy consultancy expects a decline in capex in North America and Europe, while spending in Latin America, the Middle East, and Africa is set to increase.

Mostly, the bearish outlook for oil is based on estimates of oversupply. Record amounts of oil on water—including sold cargoes en route to their destinations—are often cited as one reason for that perception. China’s gap between oil processing rates and imports is another. The International Energy Agency and the U.S. Energy Information Administration both expect the supply of crude oil to exceed demand by six figures this year. No wonder oil prices are weak, making President Trump happy.

Only they are now on the climb yet again as protests in Iran intensify, prompting worry among traders for the security of supply from OPEC, which exports its oil almost exclusively to China. It appears that worry is substantial enough to override the bearish mood following President Trump’s declaration that the United States had already started selling Venezuelan oil. Of course, countering that mood were reports that not all Big Oil majors are looking forward to rebuilding Venezuela’s oil industry, with Exxon specifically calling the country “uninvestable”. The statement prompted President Trump to threaten to block the supermajor from working in Venezuela.

Trouble in Iran, meanwhile, could spill over, jeopardizing oil transport in the Strait of Hormuz—the hottest chokepoint in global oil markets that everyone immediately thinks about when there is any violence in or around Iran. The current protests are no exception, in the context of threats made by President Trump against the Iranian government. With the Venezuelan incursion taking pretty much everyone by surprise, now everyone seems to expect more military action from the Trump administration, and not just in South America.

That expectation by itself is not enough to push oil prices much higher, MST Marquee’s head of energy research, Saul Kavonic, told Reuters. “The market is saying show me the disruption to supply before materially responding,” Kavonic said. The market may yet do just that: “There have also been calls for workers in the oil industry to down tools amid the protests,” ANZ energy analysts said in a note, as quoted in the above Reuters report. “The situation puts at least 1.9 million barrels per day of oil exports at risk of disruption,” they added.

This, and any plans President Trump may have regarding Iran, puts him in a complicated situation. Higher oil prices would help the energy industry, which he has prioritized in his second term in office. But higher prices would interfere with the affordable energy promise. Meanwhile, OPEC might yet reverse its production policy and start cutting output again. It is going to be another interesting year in oil.

By Irina Slav for Oilprice.com