2025 Energy Market Analysis: Trump and Oil Prices

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The energy landscape of 2025 has been nothing short of dynamic, marked by significant shifts that reshaped global markets. Reflecting on the past year, with the volatility in crude oil prices nearly touching a five-year low, highlights the industry’s complexities and subtleties. At Enverus Intelligence® Research, we closely monitor these trends, providing clarity amidst the uncertainty. We delve into the defining stories, unexpected surprises and underlying forces that have characterized the year. This blog post offers a comprehensive look at the energy narratives of 2025. Join us as we unpack the key developments setting the stage for the future of energy.

Navigating Revenue Risk: Alberta’s Hedging Dilemma

The impacts of fluctuating oil prices extend directly to provincial coffers, particularly for regions like Alberta. The question of how governments can manage this revenue volatility is a fascinating one. While the Alberta Heritage Fund provides a framework, it demands significant discipline, which has been lacking. From a corporate perspective, hedging instruments are typically employed to secure commodity revenues. Options include selling at a fixed price, which often carries negative public perception if prices rise above the fixed rate, or paying an insurance premium, which can also be optically unfavorable.

During my career in the oilpatch, my employer once used a “collar” strategy that could guarantee a minimum price, perhaps $50, and a maximum of $70 to ensure revenue within a defined band. However, the scale of Alberta’s production, at about 4 million barrels a day, compared to the 200,000 barrels a day we previously managed, makes such a large-scale hedging operation incredibly complex. Furthermore, hedging typically provides coverage for a maximum of about a year, with liquidity thinning out for longer durations. While options exist, convincing politicians to engage in what might be perceived as “trading” or “gambling” rather than insurance remains a significant hurdle. The Heritage Fund, being an internal mechanism, likely remains the most straightforward approach to risk management for the provincial government.

President Trump’s Unforeseen Influence on Energy Markets

Without a doubt, the biggest surprise of 2025 has been the profound influence of President Trump’s actions on global energy markets. His impact was felt across multiple fronts. OPEC decided to increase production and unwind cuts in April, a move we speculate was partly a response to the president’s public calls for lower oil prices and his threats of tariffs against various nations. Faced with members cheating on quotas and weakening demand, OPEC likely seized the opportunity to regain market share.

Trump also significantly unwound many of the Biden administration’s clean energy initiatives, even rolling back fleet mileage cars for U.S. carmakers in early December. His influence extended to Venezuela’s oil sector, a development we speculated about months prior. Even closer to home, we suspect that a West Coast pipeline, currently a topic of discussion, might not be on the table if Kamala Harris were in office instead of Trump, highlighting how his political shifts have altered the energy diversification conversation.

Tracing back the year’s events, it becomes clear that President Trump’s moves have indeed shaped where we stand today, leading to lower oil prices and a modest growth in U.S. production.

Natural Gas Forecast: LNG as the True Game Changer

On the natural gas front, considerable excitement surrounds artificial intelligence, data centers, and associated power demand. While data centers are projected to require around 2 billion cubic feet per day of gas (Bcf/d), the U.S. market currently consumes about 90 Bcf/d annually. The impact of AI demand pales in comparison to liquefied natural gas (LNG) exports at 15 Bcf/d.

It bears repeating that data centers and their gas-fired generation might be the “shiny new toy,” but LNG is the true “bread and butter” of the natural gas market. LNG is poised to fundamentally disrupt and reshape how North American gas markets operate by increasing their exposure to Asian markets, fostering greater global interconnectedness. While often overshadowed by other developments, LNG remains a critical, albeit “sleeper,” story that holds immense importance for the future of natural gas.

Looking Ahead to 2026

For 2026, we anticipate a challenging year for oil prices. However, every challenging period also presents an opportunity for future improvement. We remain bullish over the long term for both oil and gas prices.

Key Takeaways

How did oil prices fare in 2025?

West Texas Intermediate crude oil touched levels not seen since 2022, dipping below $55 USD, driven by a supply surplus and weakening demand.

What was the biggest surprise in energy markets for 2025?

President Trump’s influence significantly shaped energy markets, leading to lower oil prices, an unwinding of clean energy initiatives and shifts in global energy policy.

What is the “sleeper story” in natural gas for 2025?

LNG exports at 15 Bcf/d are the true game changer, far outweighing the demand from data centers (2 Bcf/d). These exports are  fundamentally disrupting North American gas markets by connecting them to Asian markets.

This blog post is based on an episode from the Calgary Eyeopener radio series, hosted by Loren McGinnis, featuring an interview with Al. You can check out the full episode here.