Trump’s oil and gas friendly energy secretary pick seen as ‘fantastic’ in Middle East

US President-elect Donald Trump's selection of oil industry veteran Chris Wright as energy secretary will likely be welcome in the Middle East where hydrocarbons dominate its economies, with one Saudi government official describing the nomination to S&P Global Commodity Insights on condition of anonymity as "fantastic."

However, if US oil production increases under the Trump administration, that could complicate the OPEC+ alliance's desire to raise its own output without causing a sell-off in prices, said Kamil al-Harami, an independent oil analyst and former executive for state-owned Kuwait Petroleum Corp.

"Overall, more crude production will lower prices [and] may lead to further weakening of OPEC," Harami said.

Wright, whose nomination to head the Department of Energy was widely reported Nov. 16 in the midst of the COP29 UN climate change summit, is CEO of oilfield services firm Liberty Energy, which has extensive operations in hydraulic fracturing. He is a climate change skeptic who has called net-zero plans "sinister."

If confirmed by the US Senate, he would succeed Jennifer Granholm, who told reporters at COP29 in Azerbaijan that she was hopeful that EV tax credits and other energy transition measures would remain intact under the new administration.

The energy secretary role is not directly involved with regulating US oil and gas production, though it is in charge of managing the Strategic Petroleum Reserve and issuing authorizations for LNG exports. The Energy Information Administration, a statistical agency whose regular market outlooks can influence oil and gas prices, in addition to policy, also falls within the US Department of Energy's purview.

Wright's selection came a day after Trump named his Interior secretary pick, North Dakota Gov. Doug Burgum, as head of a new National Energy Council aimed at boosting US energy production.

Wright is largely expected to defend fossil fuel use and maximize oil and gas production while finding ways to boost electricity generation as demand rises.

Rachel Ziemba, geopolitical and macro-risk analyst and founder of Ziemba Insights, said Wright is unlikely to have much to do with Middle Eastern producers as his focus will be on domestic energy policy, but expects regional petrostates will be "cautiously optimistic" about the pick.

"Wright is someone that understands the industry and is aligned with their views that fossil fuel energy is a key part of energy mix," Ziemba said.

She noted he has experience in the shale patch, where the industry has become more efficient.

"The US administration will be focused on domestic energy production and growing US market share, so some of the positives about a shift from decarbonization rhetoric may be offset by an America first focus," she said. "Nonetheless, I think [Middle East producers] will be glad to see and work with the industry expertise in Washington."

IEA criticism

Wright's views on climate change will largely dovetail with those of major Middle East oil and gas producers, who have pushed aggressively for COP29 negotiators to maintain access to fossil fuels to meet emerging demand and instead focus on controlling emissions.

He has dismissed the International Energy Agency's claims that oil demand will peak by the end of the decade, sentiments shared by OPEC.

"To me, it's some combination of complete ignorance and some of it has to just be evil," Wright said in a LinkedIn post in September. "To get 7 billion people halfway to our lifestyle [in developed economies], requires more than doubling our global oil production," he said.

The IEA's pathway to net-zero carbon emissions by 2050, which would involve no new oil and gas projects, is "a sinister goal because we spent an insane amount of money pretending we're going to achieve this ... and it's made energy more expensive, less reliable and impoverished people," Wright wrote.

OPEC in its most recent World Oil Outlook forecast that oil demand would rise by some 18 million b/d to 120.1 million b/d in 2050, driven by growth in India, other Asian economies, the Middle East and Africa, with Secretary General Haitham al-Ghais criticizing calls to eliminate fossil fuels as a "fantasy."

In the short-term, OPEC and its Russia-led allies have enacted a series of production cuts that they have been hoping to begin tapering for months, but have been prompted to delay their output rises until at least January. Subdued Chinese demand growth and rising output in the US and other rival producers have led many analysts to project a supply glut in 2025, weighing on prices.

The US is already the world's largest crude oil producer, with output set to peak at about 15.1 million b/d by 2030, or 20% of the global total, according to a November report by Commodity Insights, and Trump has said he would make the US the dominant energy producer in the world "by far!"

Commodity Insights forecasts Brent oil prices will average $84.30/b for 2024 and $78.70/b for 2025, reflecting a "well-supplied market, led by growth in the Americas" and plans by OPEC+ to unwind voluntary cuts through 2025. Platts, a part of Commodity Insights, assessed Dated Brent at $73.49/b on Nov. 15.