Under the chaotic policies of Trump, will this week's global energy summit sound the alarm for the industry?

This week, world energy industry leaders will attend the Cambridge Energy Week (CERAWeek) conference in Houston. The sharp drop in oil prices has forced major oil companies to cut thousands of jobs, despite the U.S. government's support for fossil fuels encouraging them to increase production. Since President Trump took office 47 days ago, he has rapidly reformed the government and policies, including mass layoffs, and overturned many policies of the previous administration. The reset of the energy industry will be the focus of the CERAWeek conference, which will be attended by more than 8,000 delegates. Participants and speakers include U.S. Energy Secretary Chris Wright, energy ministers from OPEC+ member countries Nigeria, Libya, and Kazakhstan, as well as CEOs of Saudi Aramco, Chevron Corporation, Royal Dutch Shell, BP p.l.c. Sponsored ADR, and Total. Trump has repeatedly urged the oil and gas industry to "drill, drill, drill," and ordered government agencies to cut red tape to maximize U.S. oil and gas production - which had already reached record levels before he took office. He ended the deadlock on approving the Xinjiang Xintai Natural Gas export project, and overturned the ban on drilling in federal waters. However, Trump's trade and foreign policies may increase the cost of the millions of barrels of oil imported by U.S. refineries from Canada and Mexico. If the U.S. eases sanctions on Russian energy in ending the Russia-Ukraine conflict, his rapid shift in Russian foreign policy could disrupt global oil flows and reduce the European market for U.S. oil and gas. Additionally, Trump ended permits for Venezuela to export oil to the U.S. and threatened to reduce Iran's oil exports to zero, indicating an interruption in global oil flows. Pulitzer Prize winner and conference organizer Dan Yergin, vice chairman of S&P Global, Inc., said in an interview: "This is an unfolding energy policy revolution... The whole industry is gasping for air. I dont think weve ever seen such a large scale of turbulence and adjustment." After OPEC+ agreed to increase production as planned in April, crude oil prices fell to a three-year low of below $70 per barrel this week. Even before this, the low oil prices of 2024 and rising equipment and service costs had squeezed energy companies. Major oil companies are under pressure, with mass layoffs and investment cuts as evidence. The second largest U.S. oil producer, Chevron Corporation, announced it will lay off up to 9,000 people, while oilfield services company SLB said they are laying off employees as part of a restructuring. Meanwhile, Elliott Management Corporation increased its stakes in oil giants BP p.l.c. Sponsored ADR and U.S. refiner Phillips 66 to drive radical changes in the performance of both companies. For the past year, global oil demand growth has been tepid, partially due to numerous new electric cars hitting the road, leading to a plateau in their car fuel demand. Refining margins have declined, severely affecting the performance of oil companies in 2024, with a similar situation expected in 2025. Additionally, this year's U.S. crude exports may decline due to the impact of retaliatory tariffs. Dan Pickering, chief investment officer of Pickering Energy Partners, said: "Its no longer A plus B equals C. There are about nine equations here. There are so many things happening at once, you pull on one string, you don't know where the other end of the string will be." Liquefied natural gas (LNG) has been a bright spot in recent months. The U.S. is already the world's largest LNG exporter, and producers plan for massive expansions. Trump overturned former President Biden's decision to halt new projects, meaning producers may soon start approving these expansion projects. Last Thursday, U.S. Interior Secretary Doug Burgum visited the Venture Global Plaquemines LNG export facility in Louisiana to promote American energy and natural gas. The company will invest an additional $18 billion to expand the plant's capacity. According to data from the U.S. Energy Information Administration (EIA), global benchmark Brent crude oil futures are expected to average $74.50 per barrel this year, dropping to $66.46 next year, lower than the over $80 per barrel last year. In a low oil price environment, there is hardly any indication that oil investments and production will increase. Oil companies are focused on capital discipline, increasing productivity, and shareholder returns, rather than drilling for more oil. Josh Young, chief investment officer of Bison Interests, said: "Costs are much higher, affecting profitability. You start to see producers cutting back funds. This is the opposite of what the president wants." Rising costs in aging shale fields are also a challenge. U.S. oil production will increase by 380,000 barrels per day this year, far below the increase of 1 million barrels per day in recent years. Morgan Stanley's research shows that oil production in producing countries is expected to grow by an average of 1% by 2025, while capital spending will decrease by 4%. Pickering said: "Shareholders say follow capital discipline, return cash to shareholders, and then youve got the most powerful people in the world. I think youre just paying lip service to the president, while following the will of shareholders."