IEF head sees Gulf at the top of Trump’s agenda 

Alamy/Alireza Teimoury

• ‘All about Iran’s barrels’
• Focus on stabilising region
• Opec cuts forecast for 4th time

The head of the International Energy Forum has told AGBI he believes the Gulf states will benefit from Donald Trump’s election victory strategically and politically, as well as in terms of investment and trade.

The IEF is headquartered in Riyadh and counts the energy ministers of 72 states as members. It describes itself as a link between the oil producers of Opec and the International Energy Agency, which speaks for wealthier energy-consuming countries. 

“Trump will try to strengthen relationships with the region, especially with Gulf countries,” said Joseph McMonigle, IEF secretary-general. 

He expects the Republican to focus on stabilising the region and sanctioning Iran’s oil exports during his second term.

Trump’s victory has so far had a limited impact on the oil market. The Brent price has dropped over 4 percent this week to around $72 a barrel on weaker global oil demand, after China’s stimulus plan disappointed investors.

The bearish mood persisted on Tuesday as Opec cut its forecast for global oil demand growth for 2024 and 2025 for the fourth consecutive time.

It forecast that world oil demand would rise by 1.82 million bpd this year, down from the 1.93 million bpd it expected last month. It estimates that global demand growth will be 1.54 million bpd next year, down from 1.64 million bpd.

IEF

Before taking his position at the IEF in 2020, McMonigle worked at the US Department of Energy during George W Bush’s first term and at the International Energy Agency, where he co-chaired the US-China energy working group.

He said the new Trump administration, which will take office in January, views Iran as the root cause of regional instability and predicts that its oil exports will be targeted in the first 30-60 days.

“There’s no negotiation, it’s all about bringing [Iran’s] exports to zero,” McMonigle said. “Even reducing them by half will have implications on energy markets.”

Iran’s oil exports dropped drastically during Trump’s first term as the US adopted a policy of maximum pressure in enforcing sanctions, but Tehran has since built an extended network of middlemen and “dark” tankers.

It has been exporting an average of 1.6 million barrels per day this year, of which 95 percent goes to China.

• Top of Trump’s to-do list: sanctions against Iran
• Oil falls as China stimulus disappoints investors
• Gulf must ‘bridge gap’ between oil and renewables

During the campaign Trump expressed consistent support for oil and gas production, repeating the slogan “Drill baby drill”. 

But according to McMonigle, markets should not assume that Trump means more domestic production. “The US oil companies are not going to produce more oil just because there is a change in the administration … this is all about Iran’s barrels,” he said. 

The companies are bound by market realities, he said, and if demand is weak, it is against their interest to invest more.

“There’s great pressure, especially among listed companies, to have capital discipline. So, not to invest in producing more, but to have a better return,” he said.

The number of active drilling rigs in the US has fallen 15 percent in the past 12 months, according to Enverus, a data provider, and upstream companies have been gradually reducing their drilling budgets. 

The picture is different when it comes to gas, where the Biden administration has halted permits for new LNG terminals.

The incoming administration is expected to lift the ban, which is likely to increase pressure on Middle Eastern LNG exporters such as Qatar, the UAE and Oman. The US has overtaken Qatar as the world’s largest LNG exporter. 

“The LNG pause will go away on day one,” McMonigle said. “There’s great demand for US LNG, especially in places like Asia.”