The oil and gas sector enters 2026 navigating a more turbulent trade and policy environment than it has faced in years, with operators and investors contending with geopolitical unpredictability, aggressive U.S. trade demands, and a swelling wave of new supply. President Donald Trump’s second term has already injected considerable volatility into global commodity markets, with energy prices increasingly driven by political maneuvering rather than fundamentals.
The Trump administration’s revival of tariff diplomacy and “America First” trade strategy is forcing global partners into high-stakes energy commitments that may not align with market realities. For U.S. exporters, the implications could be significant: short-term gains are being shadowed by rising pressure on volumes, pricing, and infrastructure capacity, particularly in the LNG and crude oil sectors.
Unrealistic Trade Pledges Pose Risks for U.S. Energy Exporters
Among the most striking developments is the growing gap between U.S. energy export targets and actual market capacity. A case in point is the European Union’s commitment—reportedly agreed as part of broader trade negotiations to purchase $250 billion annually in U.S. energy products. In 2025, however, total EU imports of U.S. crude, LNG, and coal reached just $82.3 billion, according to Kpler data. That marks only a marginal increase from $79.1 billion in 2024, underscoring the impracticality of meeting the pledged volumes within current infrastructure and production limits.
Crude exports to Europe actually declined year-over-year, falling to 1.73 million barrels per day in 2025 from 1.91 million bpd in 2024. LNG volumes, meanwhile, rose sharply, from 45.14 million metric tons to 72.24 million metric tons, but even that growth is insufficient to close the gap. U.S. coal shipments remained nearly flat.
The shortfall raises the specter of renewed trade friction. While it is unclear how rigidly the Trump administration intends to enforce these commitments, the possibility of retaliatory action or new tariff threats introduces a layer of political risk that U.S. producers and midstream operators must now price into long-term planning. Market participants across the Atlantic may be hoping for political leniency, but past behavior suggests the administration could respond with pressure or penalties if it perceives partners as failing to deliver.
Rising Supply Meets Market Saturation
Beyond the policy uncertainty, fundamentals in several segments are also shifting in ways that complicate the outlook for U.S. producers. Crude oil faces downward price pressure due to both supply and geopolitical factors. Notably, if peace talks lead to a restoration of Russian crude to global markets, a significant volume of additional supply could return, challenging the current balance. Meanwhile, U.S. domestic production remains strong, with rig counts and completion activity holding steady in the Permian and other basins despite softening prices.
In LNG, U.S. capacity is expanding at a rapid pace, with several new liquefaction trains expected to come online or ramp up in 2026. This growing supply is outpacing demand growth in key Asian and European markets, setting the stage for a more competitive pricing environment. For developers and financiers of Gulf Coast export terminals, the risk is that oversupply could suppress netback margins and delay final investment decisions on proposed projects.
This comes as global buyers grow more price-sensitive and shift procurement strategies toward shorter-term contracts or spot purchases, weakening the long-term contract model that underpins financing for many newbuild LNG projects.
Additionally, the Trump administration’s renewed focus on bilateral trade deals has emphasized large energy purchase agreements as a diplomatic tool, but such deals often assume unrealistic consumption or infrastructure buildout timelines from counterpart nations. That disconnect may exacerbate volatility in U.S. export volumes, as political targets clash with logistical constraints.
While some commodities, particularly gold, have benefited from the broader uncertainty, energy markets have largely been caught in a squeeze between expanding physical supply and increasingly erratic trade policy. The potential for tariff escalations or punitive measures if partner nations fall short of Trump’s energy trade benchmarks adds a layer of unpredictability, particularly for crude and LNG exporters heavily reliant on overseas buyers.
Looking into 2026, upstream operators, mineral owners, and midstream stakeholders face a dual challenge: managing operational risks in an increasingly oversupplied environment, and anticipating potential trade-driven disruptions in key markets. For now, fundamentals are taking a back seat to geopolitics, and the margin for error continues to narrow.
