A national energy emergency declaration, a pledge to boost oil and gas production, and the threat of tariffs on Canadian oil—these are just a few of President Trump’s first moves in the energy game since he came into office. These moves have potential implications for energy companies around the world—and this includes Argentina, which just booked a major energy trade surplus. Thanks to Trump, this may soon change.
Last year, Argentina generated an energy trade surplus last year that was the highest in 18 years, with exports gaining 22.3% and imports slumping by 49.4%. In money terms, the energy trade surplus of the South American nation stood at $5.668 billion. This was made possible by three things: the Vaca Muerta shale, which is the second-biggest shale play in the world; a pro-business policy by the Milei government; and China’s still strong appetite for crude as the Asian powerhouse was the biggest buyer of Argentinian oil.
That was then, while President Biden pushed for more subsidies for EV battery makers and more offshore wind turbines off the U.S. coast. Now, Trump is in the White House, and there will be no offshore turbines for a while. What there will be, per plans, is easier drilling permits and more oil and gas production—which would inevitably depress prices bar a fresh war in the Middle East.
Like most analysts, those in Argentina agree that Trump’s “Drill, baby, drill” ambition would be bearish for international oil prices. Also, like most analysts, Argentinian ones focus on the degree of that bullishness rather than the fact that Trump cannot order oil companies to “Drill, baby, drill”. Per the Argentinian publication the Buenos Aires Herald, more U.S. output could bring Brent crude down to $65 per barrel.
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This could squeeze the revenues of Argentinian oil producers as it would squeeze the revenues of everyone else, but it has to happen first. And Big Oil is not really on board with much more production, which is beneficial for Argentinian oil producers. Oil production in the Vaca Muerta play has quadrupled over the past five years, from less than 90,000 barrels per day to almost 400,000 bpd as of the third quarter of 2024—a figure representing a 35% annual increase. Expectations are that Vaca Muerta’s crude oil output will hit 1 million bpd by the end of the decade.
Of course, compared to over 6 million barrels daily for just the Permian in the United States, 400,000 bpd is small potatoes. Yet it is not small potatoes for Argentina—and Trump’s policies may actually contribute to the country’s oil industry growth. While the impact of Trump's energy policies on international prices is widely seen as bearish, his foreign policy might have bullish implications for some oil producers, such as Argentina.
“He will seek to reconfigure energy markets in a fragmented world order. His strategy will prioritize U.S. energy dominance and the use of oil and gas as geopolitical tools,” a senior equity research analyst at Adcap Grupo Financiero told the Buenos Aires Herald. The use of these tools, on Iran and Russia, for instance, would lead to higher prices, Matias Cattaruzzi explained, but added that using energy exports as a pressure tool on Europe could strain Europe-U.S. relations.
In such a context, alternative suppliers of critical commodities stand to benefit, and Argentina is one such alternative supplier that is eager to export even more of the energy commodities it produces. Of course, it bears noting that Trump has not yet imposed sanctions on either Russia or Iran. In fact, for now, he seems to be focusing on neighbor Canada, angering the local politicians by saying the U.S. does not need Canadian crude. Alas, Argentine crude is no alternative to Canadian crude that the U.S. does not need because, like U.S. shale, the oil extracted from the Vaca Muerta is light and sweet.
Yet even so, the Trump presidency could prove a net positive for Argentina’s oil and gas industry, even with an initial decline in international prices. First, because, as already noted, oil producers would not simply start drilling more because Trump says so. Second, global oil demand remains quite resilient to energy policy experiments. Third, Trump just withdrew the United States from the Paris Agreement on Climate Change, which has already started a chain reaction.
This chain reaction actually began before Trump was even sworn in, with the exodus of half a dozen big banks from net-zero industry groups. The European People’s Party joined in, demanding a return to 2019 EU emission reduction targets, which were a lot less ambitious than the 2023 ones, and even the International Energy Agency revised its oil demand projections for this year higher in evidence of oil demand’s resilience. Trump’s presidency may be challenging for oil producers price-wise, for a while, but ultimately, it would likely be of benefit to them.
By Irina Slav for Oilprice.com