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It may be too early to predict how Donald Trump’s second term as president will impact the global oil market. However, his victory, coupled with rising oil production from countries in the Western Hemisphere, is expected to increase oil availability in the international market, which would be beneficial for importers like India.

While it’s important not to jump to conclusions, industry leaders are optimistic that higher production from countries such as the U.S., Canada, Brazil, and Guyana could prompt the OPEC+group of oil producers to reconsider their production cuts and raise output. Trump’s diplomatic efforts, especially those aimed at reducing geopolitical conflicts, could significantly affect oil availability and affordability. With more oil entering the market, the situation is likely to stabilize. However, at some point, producers may reduce production to avoid oversupply.

Industry analysts expect that the Trump administration’s economic and energy policies will exert some downward pressure on oil prices. Currently, China is the world’s largest oil importer, and this dynamic could be impacted by Trump’s policies. If the Trump administration implements its plan to impose high tariffs, particularly on imports from China, it could negatively affect oil demand.

If Trump’s slogan, “Drill, baby, drill,” proves to be true, U.S. oil production and exports are expected to increase. This could boost global oil supply and lead major oil producers to compete for market share by ramping up production and exports.

Over the past few months, subdued demand from China and increased production from non-OPEC+ suppliers have weighed on international oil prices. From about $85 per barrel in mid-April, the price of benchmark Brent crude has fallen to $72 per barrel.

Growing U.S. crude production has posed a significant challenge to OPEC+ countries, according to a recent study by S&P Global Commodity Insights. It is expected to put downward pressure on prices, threatening OPEC+ market share. This increase in U.S. oil production, along with higher output from non-OPEC+ countries like Brazil, Guyana, and Canada, has nearly offset the impact of OPEC+ production cuts this year.

The S&P study anticipates that India and other Asian buyers will have more opportunities to “import attractively priced crude from the U.S.” as competition from OPEC suppliers intensifies. The U.S. is currently India’s fifth-largest source of crude oil, following Russia, Iraq, Saudi Arabia, and the United Arab Emirates.

Trump’s diplomatic moves could also influence the international oil market. In his campaign speeches, he pledged to end conflicts in the Middle East and address the Russia-Ukraine war. Although Trump has not yet outlined a detailed plan, his administration is likely to make concerted efforts to resolve these conflicts and achieve a diplomatic victory. If successful, these efforts could bring greater stability to the global oil market. Price fluctuations, which create instability, are the last thing the global oil market needs.

India, as the third-largest consumer of crude oil, is highly sensitive to price stability and oil availability. Both factors remain critical drivers of its economy.