KUWAIT CITY, Feb 9: The former US President Joe Biden administration’s focus on alternative energy and reducing reliance on fossil fuels over its eight-year tenure led to a decline in oil exploration investments, limiting many countries’ ability to increase production. However, with Donald Trump re-entering the White House, his statements on oil prices starkly contrast those of his predecessor.

Trump has called for lower oil prices, which would require oil-producing nations to ramp up supply -- a challenge after years of underinvestment in exploration, with few exceptions like Kuwait and Saudi Arabia. Trump’s comments about pressuring OPEC+ to reduce oil prices and imposing taxes on production have raised concerns about the economic impact on Gulf countries. Experts warn that such policies could disrupt national budgets and emphasize the need for the region to hedge against unexpected crises, given the potential negative effects on their financial stability. Oil refining and marketing expert Abdul Hamid Al-Awadhi stressed that Trump’s statements on oil prices and taxation could significantly impact the global economy. The US remains a dominant force in the energy sector, producing about 13 million barrels per day and operating 132 refineries. Even a minor increase in gasoline prices sparks public discontent in the US, highlighting the sensitivity of oil related policies.

Al-Awadhi noted that Trump’s push for increased US oil production -- both on land and offshore -- is feasible, as he seeks to restore America’s dominance in oil and technology. He warned against underestimating Trump’s stance, given that oil drives 60 percent of the global economy. Al-Awadhi linked Trump’s statements to his strategic outreach to Saudi Arabia. While the Kingdom exports 11 million barrels daily, it has a production capacity of 13 million barrels.

Trump may be leveraging lower oil prices to secure expanded Saudi investments in the US. He also referenced Saudi Arabia’s 1973 oil embargo, which had a profound impact on global trade, causing oil prices to surge from $3 to $15 per barrel. Since then, the US has sought to mitigate future supply disruptions through strategic energy policies. Discussing the economic implications for Gulf states, Al-Awadhi pointed out that the region holds over 44 percent of the world’s proven oil and gas reserves. He questioned whether Trump’s focus on Gulf oil is a return to historical policies of leveraging oil dollars or an extension of long-standing economic strategies dating back to oil discoveries in the Arabian Peninsula. He emphasized that Gulf nations must learn from past experiences and adopt precautionary measures, including Unified Gulf oil policies for production, refining, and transportation, integrated economic policies for trade and investment, expansion of oil and gas projects through regional and global partnerships and development of international refineries to diversify revenue streams.

Former Chevron consultant Dr. Ali Al-Hababi argued that Trump’s demand for lower oil prices would necessitate significantly increased oil output. However, OPEC is unlikely to accommodate such requests, as it struggles to enforce production limits among member states. Moreover, oil extraction costs have risen in recent years, making it difficult for OPEC+ countries to accept price reductions without harming their national budgets. Oil expert Kamel Al-Harami warned that Trump’s insistence on lowering oil prices could backfire, ultimately harming the American economy. The US produces about 13.5 million barrels per day, and lower prices could reduce domestic revenues while placing financial strain on American citizens. Al-Harami suggested that a more effective approach to lowering oil prices would be diplomatic, such as resolving the Russia-Ukraine conflict. If successful, this could drive prices below $70 per barrel. He also stressed the importance of diversifying Gulf economies to reduce dependence on oil price fluctuations.

Professor of Economics and Oil Expert Dr. Abdullah Al-Enezi expressed concern over Kuwait’s continued reliance on oil revenue, despite its vulnerability to political and market shifts. He highlighted the country’s financial deficits: -- 2023-2024: Oil revenues of 21.528 billion dinars, deficit of 1.6 billion dinars. -- 2024-2025: Oil revenues dropped to 16.234 billion dinars, deficit widened to 5.6 billion dinars. -- 2025-2026 (Projected): Oil revenues estimated at 15.3 billion dinars, deficit expected to reach 6.3 billion dinars.

Dr. Al-Enezi urged Kuwait to prepare for future economic challenges by diversifying revenue sources and reducing its overreliance on oil. He emphasized that financial stability depends on broadening income streams, particularly in light of unpredictable global energy policies, such as Trump’s push for lower oil prices or potential restrictions on oil exports. As the world watches Trump’s evolving energy policies, Gulf nations must take proactive steps to shield their economies from market volatility, ensuring long-term financial security in an uncertain global landscape.

By Najeh Bilal
Al-Seyassah/Arab Times Staff