With US President elect Donald Trump’s narrative of “Drill, Baby, Drill” has again created tensions between those who “demonise” fossil fuel and the fossil fuel producing nations.

Nations heavily reliant on fossil fuel imports are now looking to rework their strategies.

India is a high consumer of fossil fuel, due to its growing economy.

Thanks to its refining strength, India is steadily becoming a dominant producer of refined petroleum products.

In 2025, the scene of the energy markets is surely expected to shift if the incoming US administration’s stated goals are to be believed.

So with the Trump administration set to take charge next month, what will be the challenges for nations like India?

Umud Shokri, senior visiting fellow at George Mason University and Energy Strategist feels that Trump’s return with his “Drill, Baby, Drill” narrative could significantly impact the fossil fuel industry: expected regulatory rollbacks that may create a favourable environment for fossil fuel companies by repealing key climate regulations, while increased access to public lands could facilitate oil and gas exploration.

“However, industry executives might prioritise profitability over maximum production, resisting pressure to boost output. Additionally, market realities such as global demand fluctuations and projections could limit Trump’s ability to enhance production,” he said.

Finally, repealing clean energy initiatives may have economic repercussions, particularly in Republican districts that benefit from these programmes, he said adding that while Trump’s policies may favour fossil fuels more than Joe Biden’s, the actual impact will depend on market forces and industry dynamics.

India impact

India’s main sources of crude oil imports are: Iraq, Saudi Arabia, Russia, United Arab Emirates, and the US.

India has been redefining its energy supply lines. Russian crude has now become the mainstay for Indian refining systems and dependence on the Middle East has reduced.

India faces several challenges as a major energy consumer, including the need to balance its growing energy demand with security and affordability, Shokri said.

“The country’s heavy reliance on oil imports makes it vulnerable to supply disruptions, while rapidly increasing renewable capacity to meet the target of 500 GW by 2030 poses logistical and financial challenges. Additionally, securing an estimated $10 trillion for the energy transition by 2070 is a significant hurdle,” he added.

India must also navigate the complexities of managing the transition from fossil fuels to renewables while maintaining thermal energy as a baseload source, Shokri said.

Pulkit Agarwal, Head of India Content (cross commodities) S&P Global Commodity Insights, says: “While the short-run effect from the US may not fully translate into higher oil production immediately, there could be interesting times ahead in terms of drilling rights, infrastructure build-out and LNG export project approvals.”

India has become the driver of global oil demand growth, and the global markets will increasingly look to India’s consumption markets for demand-led cues as China — a long time leader in global demand growth equation — slows in terms of incremental oil demand, he said.

According to Narendra Taneja, a noted energy expert, “When America’s President-elect Trump says ‘Drill, Baby, Drill’ to boost domestic oil and gas production, it resonates all across the oil producing world. Oil producing countries are welcoming the change in narrative as oil had been demonised by the outgoing Biden administration”.

Market realignment

In fact, there will be lot of realignment happening now as many big players in oil business, who had stopped investing in new discoveries, pivoting renewables, will go back to their core business, he said.

On the domestic front, India will need to further incentivise oil and gas exploration and production segment of the sector, he said, “with focus on deep and ultra deep water.”

“There is an urgent need for a solid national E&P road map in place, with milestones, built on consensus with various states and stakeholders, to achieve oil and gas independence quickly. We also need to further invest in oil and gas, particularly in discovered assets, overseas as part of the energy independence efforts,” he added.

“With Indian economy’s growing energy needs, it is clear that renewables at best will only be supplementing fossil fuels and not replacing them for long time to come,” said Taneja.

The petroleum consumption data for November — which showed an increase of 4 to 9 per cent, depending on the product, only amplifies the message, he stressed. Of the total energy consumed in the world today, 80.6 per cent still comes from coal, oil and gas, he added.

Clearly, energy is poised to remain a central focus of geopolitical tensions due to several interconnected factors.

Shokri said, “Vulnerabilities in global energy systems have been exposed by recent conflicts, highlighting risks to both energy security and climate goals. Geopolitical events, such as the Russia-Ukraine conflict, have accelerated efforts by nations to reduce their dependence on specific energy suppliers, reshaping global energy trade patterns.”

These geopolitical dynamics are likely to have far-reaching consequences for the global energy landscape. “Nations may increasingly prioritize energy independence and diversification of supply sources, potentially leading to a fragmentation of global energy markets. This could result in increased investment in domestic energy production and alternative technologies, as well as the formation of new strategic alliances,” he said.

“The race to secure critical minerals may intensify, with countries and companies seeking to establish more resilient and diversified supply chains. Furthermore, the interplay between energy security concerns and climate objectives may lead to complex policy decisions, as countries balance the need for immediate energy security with long-term sustainability goals,” he added.

The outcome of these geopolitical tensions will likely shape the pace and direction of the global energy transition, influencing investment patterns, technological development, and international cooperation in the energy sector for years to come.

A continuing challenge for India will be to navigate the evolving geopolitical landscape. To strengthen its position in the energy sector, India should pursue a multifaceted approach including accelerating renewable deployment.

Published on December 30, 2024