The proposed refill of the U.S. Strategic Petroleum Reserve under a potential Trump administration, alongside executive orders designed to boost oil and gas production, could create significant tailwinds for major energy companies, especially those with diversified operations and a history of shareholder returns.
The U.S. Strategic Petroleum Reserve (SPR), established in 1975 by President Gerald Ford in the wake of the 1973-1974 oil embargo, was designed to safeguard the nation against severe oil supply disruptions. This critical national asset, which once held significant reserves, saw more than 200 million barrels released under President Biden’s administration in 2022, largely in response to supply disruptions following Russia’s invasion of Ukraine.
While these emergency sales aimed to stabilize the market, many observers felt they diverged from the SPR’s original intent. Now, with West Texas Intermediate (WTI) oil prices recently hitting lows not seen since 2021 and falling below $60 per barrel, a new era of energy policy is on the horizon. President Trump has pledged to replenish the SPR by purchasing 1 million barrels of oil, a strategic move that could significantly benefit major oil companies.
Trump’s Energy Policy: A Clear Shift Towards Fossil Fuel Dominance
President Trump’s energy agenda marks a distinct shift towards bolstering the fossil fuel industry and rolling back regulations. His executive orders include lifting the pause on liquefied natural gas (LNG) export permits, expediting energy project approvals on federal lands, and temporarily halting offshore wind development. Beyond these measures, the administration has signaled the possibility of tightening sanctions on Iran and Venezuela, implementing tariffs on Canadian and Mexican oil imports, and, notably, refilling the SPR, as confirmed by Reuters.
These policy changes are expected to create a more favorable environment for oil and gas producers. While large corporations possess the resources to navigate complex regulations, smaller operators and natural gas companies are particularly poised to benefit from this regulatory relief. The natural gas sector, in particular, could see new opportunities through increased export permits and pipeline development, especially for producers in constrained basins like Appalachia.
Market Dynamics and Potential Price Pressures
The current landscape for oil is characterized by a combination of oversupply and weak demand, leading to rising global inventories and downward pressure on prices. Despite this, both OPEC+ and U.S. production continue to increase amidst relatively stable global oil demand. The U.S. Energy Information Administration (EIA) projects crude oil prices to fall below the current $60 per barrel by the end of the year and average near $50 per barrel through 2026, as more supply enters an already well-supplied market, according to its Short-Term Energy Outlook.
However, President Trump’s proposed policies introduce potential inflationary pressures. The plan to refill the SPR would increase demand for crude, potentially pushing prices higher. Additionally, tightening sanctions on Iran and Venezuela, combined with proposed tariffs on imported Canadian and Mexican oil, could constrain supply, further escalating costs. This creates a fascinating tension for investors, as the administration’s goal of lowering consumer prices could conflict with these inflationary energy policies.
Investment Opportunities in Integrated Oil Giants
For investors, the current low oil prices and the anticipated policy shifts present a compelling entry point into some of the industry’s biggest and best mega-cap integrated oil leaders. These companies offer dependable dividends and are rated “Buy” by major Wall Street firms, making them attractive for long-term positions.
BP (NYSE: BP)
As one of the premier European integrated oil giants, BP p.l.c. offers shareholders a substantial 5.71% dividend. The company operates across various segments, including gas & low carbon energy, oil production & operations, customers & products, and Rosneft segments. BP is actively involved in producing and trading natural gas, offering biofuels, and investing in renewable energy facilities like onshore and offshore wind and solar power. It also provides decarbonization solutions such as hydrogen and carbon capture, usage, and storage. Berenberg Bank maintains a Buy rating on BP.
Chevron (NYSE: CVX)
Chevron Corporation is an American multinational energy company with a primary focus on oil and gas. This integrated giant is often considered a safer option for investors, paying a substantial 4.40% dividend, which saw a 5% increase earlier this year. Chevron boasts strong credit ratings (AA), diversified global operations, robust margins, and a consistent history of paying and raising dividends annually. In late 2023, Chevron announced a definitive agreement to acquire Hess Corporation in an all-stock transaction valued at $53 billion, significantly expanding its upstream portfolio. UBS has a Buy rating with a $197 target price.
ConocoPhillips (NYSE: COP)
ConocoPhillips is a leading exploration and production (E&P) company known for its rich 3.57% dividend. The company strategically completed a $22.5 billion acquisition of Marathon Oil last year, adding high-quality assets in key shale plays like Eagle Ford and Bakken. ConocoPhillips maintains a diverse global footprint, with significant operations in Alaska, the Lower 48 states (including the Gulf of Mexico), Canadian oil sands and unconventional plays, and extensive operations across Europe, the Middle East, North Africa, and Asia Pacific. Jefferies has a Buy rating with a $120 target price.
Exxon Mobil (NYSE: XOM)
Exxon Mobil Corporation stands as the world’s largest international integrated oil and gas company, managing an industry-leading portfolio of resources. Trading at 18% below fair value and yielding 3.48%, the decline in oil prices presents an excellent entry point for investors seeking a strong dividend. ExxonMobil explores for and produces crude oil and natural gas globally, also manufacturing and marketing commodity petrochemicals and specialty products. The company completed its $59.5 billion all-stock purchase of Pioneer Natural Resources Company in 2024, creating the largest U.S. oil field producer and securing a decade of low-cost production. UBS holds a Buy rating on Exxon Mobil with a $143 target price objective.
TotalEnergies (NYSE: TTE)
TotalEnergies SE, a French-integrated energy and petroleum company founded in 1924, is one of the seven supermajor oil companies. This European giant offers a massive 6.35% dividend and operates globally through four segments: exploration and production, integrated gas, renewables and power, and refining, chemicals, marketing, and services. The company is actively involved in liquefied natural gas (LNG) production, shipping, and trading, as well as electricity production from natural gas, wind, solar, hydroelectric, and biogas sources. Royal Bank of Canada has a target price of $80.95 in U.S. dollars.
Key Uncertainties and Long-Term Outlook
For energy investors, these proposed policies suggest a potentially favorable environment for traditional oil and gas companies, particularly those operating on federal lands where regulatory costs may decline. However, the ultimate impact on profitability will heavily depend on fluctuating oil prices, which face competing pressures from various Trump policies. Despite a friendlier regulatory environment, energy companies have historically shown a reluctance to allocate additional capital for aggressive drilling, with economics often driving investment decisions.
The clean energy outlook also presents nuanced risks. While the administration’s pause on Inflation Reduction Act (IRA) and infrastructure law funding introduces uncertainty for clean energy investments, many renewable projects are concentrated in Republican-led states, offering some political protection. Utilities continue to see renewables, alongside natural gas and nuclear, as vital components of the future power mix, especially with growing electricity demand from data centers servicing artificial intelligence customers. Ultimately, the interplay between potentially inflationary policies and the goal of lower consumer prices, coupled with tariff uncertainties, could drive market volatility in the coming months, necessitating a diligent, long-term investment approach.
