How Trump’s new energy policies reshape global oil markets

Only two months into his second term, President Donald Trump has wasted no time reactivating his signature “energy dominance” doctrine—this time, with even sharper tools and bolder ambitions.

The initial executive orders and international policy actions from his administration show a revitalised transactional approach to energy diplomacy which relies heavily on punitive sanctions and aggressive rhetoric, together with renewed tariff threats.

Trump’s return to the Presidency disrupts the fragile equilibrium between energy supply and geopolitical stability while nations work to balance these needs with climate objectives.

Iran: A resurging sanctions regime

President Trump initiated his first international action by enlarging sanctions against Iran, which affected both its oil exports and the logistics and insurance companies associated with energy shipments. In February 2025, the OFAC (Office of Foreign Assets Control) from the US Treasury Department named over 25 Gulf region entities which participate in Iranian oil smuggling operations.

The result? Refinitiv, one of the world’s largest providers of financial markets data and infrastructure, reported that Iran’s crude exports fell from 1.4 million barrels daily, in December 2024, to less than 500,000 barrels per day by mid-March 2025.

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Behnam Ben Taleblu from the Foundation for Defence of Democracies called the move a targeted blockade of Iran’s financial resources and regional influence. Trump resumed his maximum pressure strategy while minimising diplomatic restrictions.

Threats of secondary sanctions force Asian importers, such as China and India, to confront challenges that disrupt global energy supply chains and encourage covert re-routing of oil shipments.

Venezuela: Tariffs turn tactical

President Trump took global markets by surprise when he enforced a 25 per cent tariff on countries importing Venezuelan crude through the International Emergency Economic Powers Act in early March. PDVSA attempted to increase exports to Asian markets while challenging prior sanctions.

Reuters reported that Venezuela managed to increase its oil shipments to 700,000 barrels daily because of temporary relief provided by the Biden administration. Now, those gains risk evaporating.Francisco Monaldi from Rice University’s Baker Institute argues that the US strategy extends beyond pressuring Maduro to prevent nations, including China and India, from undermining America’s energy supremacy.The heavy crude market faces potential price increases as global refiners who deal with narrow profits and Red Sea shipping delays need to change their oil source strategies.

Middle East tensions: Reigniting risk premiums

Trump’s clear support for Israel, together with his unclear position on Gaza ceasefire efforts, has increased regional instability. A US logistics base in Iraq suffered an attack from an Iranian-backed militia which triggered US air strikes near the Syrian border last week. Brent crude prices surged from $81 to $87 per barrel immediately.Trump’s aggressive actions serve as dry tinder to the already volatile Middle East powder keg according to Helima Croft from RBC Capital Markets. The market is, once again, pricing in geopolitical risk premiums due to current events.

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Trump’s recent high-profile call with Crown Prince, Mohammed Bin Salman, shows that US regional influence still depends significantly on energy and arms agreements with Saudi Arabia. Human rights?  Barely mentioned.

America First, again: Domestic production and fossil-fuel favoritism

Trump has undone various Biden climate executive orders within two months and granted new Gulf of Mexico offshore drilling leases, while accelerating shale development permits across Texas and New Mexico. According to the US Energy Information Administration (EIA), forecasts indicate a potential production peak of 13.6 million barrels per day by the third quarter of 2025, if current trends persist.Trump’s rhetoric remains consistent. “We’re going to drill like never before. During his rally in West Virginia in February, he announced that the United States would stop begging for oil and, instead, takes control of it.Analysts caution that prioritising fossil fuel extraction could drive away international partners who support climate action and net-zero emissions goals.Amy Myers Jaffe from NYU pointed out that current policies represent a dangerous shift from decarbonisation efforts toward extreme carbonisation. “Markets want stability, not ideological whiplash.”

Crude power in the Oval Office

As a conclusion, President Trump’s second term is already reshaping global oil diplomacy with familiar tools: sanctions, tariffs and unpredictable diplomacy. The current situation presents increased risks because energy markets show greater instability while the need for energy transition becomes more pressing and geopolitical conflicts become more complex.The initial 60 days serve as a warning that global oil markets should anticipate a volatile period where political news will have as much market influence as OPEC meetings.The current policy shows energy being used as a tool of foreign policy with bold forcefulness. The Trump period brings familiar dynamics to importers, producers and consumers, but raises the risk levels significantly.

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The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.