Oil & Gas

US President-elect Donald Trump has called on the European Union to purchase more American oil and liquefied natural gas (LNG) to address trade imbalances, threatening tariffs on EU goods if his demands are not met. "I told the European Union that they must make up their tremendous deficit with the United States by the large-scale purchase of our oil and gas. Otherwise, it is TARIFFS all the way!!!" Trump stated on his Truth Social platform. The US, already the world’s largest producer of crude oil and top LNG exporter, sees this as a chance to expand its market share in Europe.

The EU is already the largest importer of American LNG, but Russian supplies remain significant despite the ongoing conflict in Ukraine. European Commission President Ursula von der Leyen recently suggested replacing Russian LNG with US imports to lower energy costs and reduce dependency on Moscow. "LNG is one of the topics that we touched upon," von der Leyen said following discussions with Trump, emphasizing that American LNG could provide a cheaper and more reliable alternative for Europe. The EU is actively exploring options to curtail Russia’s role in its energy markets, even as Russian gas remains largely exempt from sanctions.

Despite Trump’s demands, EU officials have signaled readiness to counter any aggressive trade measures. The bloc has fortified its trade policies since Trump imposed tariffs on European steel and aluminum during his previous term, citing national security. Germany’s Foreign Minister Annalena Baerbock warned of the potential for renewed trade tensions, stating, "If the new US administration pursues an 'America first' policy in the sectors of climate or trade, then our response will be 'Europe united.'" The EU's new anti-coercion instrument provides tools to impose countermeasures if necessary, underscoring the bloc’s preparedness for a trade war.

As Ukraine signals its intent not to renew its gas transit agreement with Russia after 2024, the European Commission has reassured member states that replacing Russian gas volumes would have minimal impact on prices. With over 500 billion cubic meters of LNG produced globally each year, the EU remains focused on diversifying its energy sources while balancing relations with Washington. However, the prospect of tariffs looms large, potentially complicating the EU's plans for energy security and its ongoing efforts to maintain unity in a volatile geopolitical landscape.