How “Trumponomics 2.0“ could affect oil and Kazakhstan

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Tengrinews.kz – How might Donald Trump's first steps as president of the United States, such as changes in oil policy and the introduction of high import tariffs, affect global oil prices and impact Kazakhstan's economy? A correspondent from Tengrinews.kz discussed this with analysts.

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Tengrinews.kz – How might Donald Trump's first steps as president of the United States, such as changes in oil policy and the introduction of high import tariffs, affect global oil prices and impact Kazakhstan's economy? A correspondent from Tengrinews.kz discussed this with analysts.

"Trumponomics 2.0" is how the media refers to Donald Trump's updated economic policy aimed at developing the U.S. domestic economy. It includes increasing oil and gas production, protecting domestic producers through import tariffs, reducing the trade deficit, deregulating business, and reducing reliance on international obligations. The main goal is to strengthen economic independence and bolster the U.S.'s position.

Financial analyst Andrey Chebotarev stated that Donald Trump's proposals could lead to a significant decrease in oil prices, possibly dropping to as low as $50 per barrel or even lower.

He emphasized, however, that increasing oil production in the U.S. won't happen quickly. In his opinion, despite the removal of drilling restrictions, developing new wells will take at least six months.

"The government of Kazakhstan has a 'Plan B' for this scenario. Our budget is drafted with three scenarios: the base scenario (oil price at $70 per barrel), the optimistic scenario (price at $90 and above), and the pessimistic scenario (price at $50 per barrel). In other words, the government is prepared for a price drop to $50," the expert noted.

Senior Researcher at the Center for Regional Analysis NAC Analytica, Aruzhan Meirkhanova, believes that a fall in oil prices could negatively impact Kazakhstan's tax situation, as oil remains a key source of revenue for the state budget.

"Currently, the budget is formed based on a baseline scenario with a price of $75 per barrel. Therefore, a significant drop in oil prices represents a substantial risk factor. However, the country has already experienced a significant drop in oil prices. In such cases, the government cuts expenses and develops anti-crisis measures. In these conditions, the adaptability of the government to various shocks, including high volatility in oil prices, is especially important," the expert commented.

Meirkhanova noted that the U.S., as one of the largest oil producers, inevitably influences global energy prices. Trump's introduction of emergency measures in the energy sector aimed at lifting environmental restrictions and developing energy infrastructure aligns with his strategy of turning the U.S. into an energy superpower. The "Storm, baby, storm" policy, according to her, implies supporting American producers by reducing energy prices.

"The market is reacting cautiously for now. On Monday, the price of Brent oil only decreased by 0.8 percent," she said.

Meirkhanova also believes that an immediate drop in oil prices will not happen, and the U.S. president cannot independently determine oil production volumes.

"The effect of 'Trumponomics' will only become noticeable after some time. American experts expect that WTI oil prices will drop below $60 per barrel only by the middle of President Donald Trump's term, with a projected average of $58.62 per barrel by 2027. The forecasts of global agencies for oil prices in 2025 generally reflect moderate pessimism. Although Trump's statements show some influence, they do not override fundamental factors—supply and demand balance," the expert said.

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Expert at the Institute of Innovative Economics and Professor at KazNU, Magbat Spanov, noted that one of the most significant decrees for the global economy issued by Trump was the U.S. withdrawal from the Paris Climate Agreement, which regulates the emission levels of participating countries.

In his opinion, this could become an important competitive advantage for the U.S. and have global consequences, as leaving the agreement will allow American companies to develop new oil and gas fields without considering environmental consequences. This could affect the economy, as the U.S. increases the extraction of mineral resources. This, in turn, will generally lead to a decrease in oil prices.

He also highlighted the issue of U.S. sanctions, which could indirectly benefit Kazakhstan, as their extension would help maintain oil prices at $80 per barrel.

"On the one hand, as it seems to me, they will further lower the price at which European countries can buy oil from Russia, i.e., lower than $60 per barrel. In case Russia refuses to sign a peace treaty with Ukraine. They will apply various mechanisms to force them to do this, including measures like lowering the price of Russian oil. This will be one of the main levers of pressure on Russia. If the price of Russian oil drops, oil prices will remain at the same level of $80," Spanov stated.

According to Aruzhan Meirkhanova, if Washington increases sanctions pressure, it will lead to increased volatility in global markets, which will affect Kazakhstan as well.

"An increase in sanctions could create additional risks for logistics and trade. At the same time, easing sanctions pressure would bring certain benefits to Kazakhstan, including stabilizing logistics chains and reducing the threat of secondary sanctions," said Meirkhanova.

Magbat Spanov also pointed out that investments in the oil and gas sector, in the context of Trump's decrees to increase oil production, are long-term in nature, and profits from them can be expected in two to three years. Moreover, Trump's relations with China and other countries are defined by his tendency to act through force, which will lead to further destabilization of the global economy. The economy will become more volatile, and the situation is expected to worsen.

"The U.S. will seek to fix its trade balance (the dominance of imports over exports). Trump’s task is to reduce the trade deficit, which currently amounts to $36 trillion. In fact, a third of the country's budget goes to servicing this debt," said Spanov.

He clarified that the negative trade balance of the U.S. is primarily with China and Western Europe.

"The U.S. will create obstacles to trade with these countries. To do this, the U.S. is looking to develop the Panama Canal and Greenland. The canal allows the U.S. to engage in profitable trade, and Greenland is the 37th most important resource from the 50 most in-demand resources," added the expert.

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Regarding the introduction of high trade tariffs on exports to the U.S. from other countries, Andrei Chebotarev believes that this will not directly affect Kazakhstan, as our country almost does not export to the U.S.

However, this could indirectly affect Kazakhstan, as tariffs slow down economic growth, which is especially critical for China. If Chinese exports to the U.S. decrease, it will slow down the global economy, as China is its main driver. Slower economic growth could put additional pressure on oil prices.

"In any case, this will not happen quickly, and the consequences of this decision, if they do occur, will not be felt next month," added Chebotarev.

Aruzhan Meirkhanova agrees with Chebotarev. She also suggests that this initiative regarding trade tariffs does not pose significant threats to Kazakhstan.

"The volume of Kazakhstan's exports to the U.S. remains small, and there is no reason to believe that Kazakhstan’s exported goods will be subject to trade restrictions. On the contrary, there are positive signals in bilateral relations," emphasized Meirkhanova.

The expert reminded that Trump instructed federal agencies to develop recommendations for creating an "External Revenue Service," which will be responsible for collecting customs duties and other trade fees.

"On the day of his inauguration, he mentioned the possibility of imposing 25% tariffs on Canada and Mexico starting from February 1, although details on the taxation of Chinese imports have not yet been announced. He had previously threatened tariffs up to 60% on Chinese goods. However, such measures are likely to be directed primarily at countries with the largest negative trade balance with the U.S.," informed Meirkhanova.

According to her, during hearings in the U.S. Congress, Marco Rubio, nominated for the position of Secretary of State, emphasized that the Jackson-Vanik amendments had lost their relevance and expressed support for their repeal, which could help normalize trade relations.

"Moreover, Kazakhstan is acquiring strategic importance for the U.S. in the context of diversifying the supply chains of critical minerals, which highlights the prospects for further strengthening economic cooperation," Meirkhanova pointed out.

It should be reminded that on January 20, U.S. President Donald Trump was inaugurated and took office. On his first day in the White House, he signed several executive orders. These orders cover topics such as the formation of the Cabinet, the cancellation of Biden's decisions, the declaration of a state of emergency at the U.S.-Mexico border, withdrawal from international agreements, and limiting the right to citizenship.

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