Gas prices in Europe fall by more than 15%

Trump's return deals a blow to the energy transition. The United States has never pumped as much oil as it did last year, and with Trump in the presidency, this trend will only get worse. The same applies to liquefied natural gas (LNG) exports. According to our study, gas prices in Europe could fall by more than 15% over the next five years.

Johan Geeroms, our Director of Risk Underwriting Benelux: "Trump has promised his voters to curb inflation. To achieve this, he intends to produce more oil to lower its price. All the signs are that the oil industry has a free hand. His friends hold key positions in his future administration: oil tycoon Doug Burgum of North Dakota and Chris Wright, CEO of fracking company Liberty Energy."

This article contains:

Key insights

Increased exports of liquefied natural gas under Trump could lead to a drop of more than 15% in European gas prices over five years.
Trump plans to increase oil and LNG production, putting the brakes on the energy transition.
The removal of environmental regulations could jeopardize the objectives of the Paris Agreement.
Potential sanctions against Iran could exacerbate tensions in the Middle East.

Increase in LNG exports

In recent years, the USA has become a major supplier of liquefied natural gas (LNG), notably to replace Russian gas after the war in Ukraine. Johan Geeroms: "Biden prevented the construction of new LNG terminals. Trump will restart it immediately. He will also address the issue of billions of dollars in subsidies and loans to accelerate the energy transition. Increased LNG exports will directly affect the wallets of European businesses and citizens. According to our research, gas prices in Europe could fall by more than 15% over the next five years as a result of increased LNG exports."

Climate policy under threat

Johan Geeroms points out that Trump has already scrapped many environmental regulations in his first term, such as the Clean Power Plan and stricter vehicle emission standards. He is expected to continue down this path. "This change of course not only undermines U.S. efforts to reduce greenhouse gas emissions, it also thwarts climate policy globally. The decline in funding for renewable energy projects and international collaboration is putting severe pressure on the climate goals of the Paris Agreement."

Break-even point

The United States is the world's leading oil producer, with daily output of nearly 13 million barrels in 2023. And it's set to rise further under Trump. Johan Geeroms: "Trump promises to reduce fuel prices, but it won't be that easy. The cost of producing oil is already close to the break-even point. And the increase in production capacity will only be felt in the medium term."

Tensions on the oil market

Johan Geeroms also draws attention to Iran. "It is very likely that Trump will again impose heavy sanctions to curb Iranian oil exports. New measures could fuel tensions on the oil market. We believe they could lead to a 5-10% rise in oil prices. They would not only accentuate global inflation, but also heighten tensions in the Middle East, and in particular around the Strait of Hormuz, through which 20% of the world's oil transits."

Short-term thinking

In conclusion, Johan Geeroms argues that Trump's return to the presidency poses a serious threat to the global energy transition and climate efforts. "In the short term, increasing oil and gas production seems economically attractive. But in the long term, it can be disastrous for the environment and the stability of the global energy supply. It is precisely at a time when it is imperative to work together to achieve climate goals that Trump appears to be backtracking."

Download the report

The latest news and tips in your mailbox every 8 weeks?

Then sign up now for our newsletter Allianz Trade Magazine!
We will then send you the latest developments on the economy, sectors, bankruptcies and tips for optimal debtor management every 8 weeks.

Subscribe now

Read our latest articles:

Dec 26, 2024

Helpful links

+32(0)2 790 24 15

newsletter