Oil prices reached an inflection point June 1, shooting up 25% in 20 days (as of press time), driven by increasing geopolitical volatility across the MENA region. That complicates Egypt’s problem of rising energy costs, given it is a net importer of oil and natural gas and subsidizes them for individuals and industries.
The straightforward response is to increase local oil and gas excavation and production. “Egypt seeks to attract more investments in the oil and gas sector by offering 61 new investment opportunities for research, exploration, and production,” Egypt Oil & Gas Group, a media company owned by the Petroleum and Mineral Resources Ministry, said in a February note,
Attracting U.S. oil and gas investors should prove wise. For one, U.S. President Donald Trump’s “drill, baby, drill” policy is fast-tracking fossil fuel investments.
However, despite the U.S. administration’s strong political will to reprioritize fossil fuels, a lot is riding on oil and gas prices globally and what is best for OPEC+, a cartel of the world’s largest oil producers, and its de facto leader, Saudi Arabia.
Reverse course
In his second term (2025 to 2028), Trump is providing significant support to fossil fuel projects while withdrawing support from clean energy projects at home and abroad.
On Inauguration Day, he signed an executive order saying, “It is the policy of the United States … to encourage energy exploration and production … protect the United States’ economic and national security by ensuring that an abundant supply of reliable energy is readily accessible.”
The order “ensures that all regulatory requirements related to energy are grounded in clearly applicable law” and that “no federal funding” would be given to existing, let alone new, clean energy projects.
Trump also annulled 12 executive orders related to energy transition issued by his predecessor. They encompass all climate-related agreements and commitments, including the UN’s 2015 Paris Climate Agreement.
Six months in
“From Africa to Southeast Asia, the Trump administration is canceling U.S. support for projects designated to replace coal, oil and gas with clean energy,” according to news portal Climate Home News in May. They are “pushing instead for the use of American taxpayers’ money to support planet-heating fossil fuels.”
In March, Trump froze a $56 billion commitment to the 2021 Just Energy Transition Partnership program, which supports eco-friendly projects in South Africa, Indonesia and Vietnam. The United States contributed 10% of the program’s total grants and pledges.
In a keynote address before the Institute of International Finance in April, U.S. Treasury Secretary Scott Bessent said the World Bank must “prioritize affordability in energy investment … In most cases, this means investing in gas and other fossil fuel-based energy production.” He added, “Energy abundance sparks economic abundance. That’s why the bank should encourage an all-of-the-above approach to energy development.”
In May, the board of the Export-Import Bank of the United States (EXIM) agreed to “reverse a ban on funding coal-fired power projects,” reported Climate Change News, to align with Trump’s executive order, which stressed, “Any identified preferences against coal use shall immediately be eliminated.” The order spotlighted “financing coal mining projects and electricity generation projects.”
Also in May, Trump canceled renewable energy projects by the Development Finance Corporation, a federal agency. One of the biggest was a $1 billion credit line for South Africa’s green energy projects.
Trump’s 2026 proposed budget cancels $500 million in financing pledged to clean energy projects in the African Development Fund; $275 million to the Climate Investment Fund and Global Environment Facility, two standalone funds; and $555 million earmarked to the African Development Bank, as they are “not currently aligned with administration priorities,” Trump told the media.
Opportunities overseas
Trump’s fossil fuel only policy is accelerating funding abroad. In March, the U.S. administration provided TotalEnergies, a French-owned global integrated energy company, with $4.7 billion via the EXIM Bank to continue operating its $20 billion liquefied natural gas project in Mozambique.
American banks will benefit even more from Trump’s energy U-turn. According to Oil Change International, a think tank, “U.S. banks committed $289 billion in fossil fuel financing in 2024, one-third of the global financing for that year … JPMorgan Chase, Bank of America, Citigroup and Wells Fargo … alone represented 21% of total global fossil fuel financing.”
American oil companies are expanding in Egypt in 2025. U.S. ExxonMobil Egypt Upstream Limited announced a new gas discovery in January. “This well is not deep, … which gives hope for the ease and speed of its development,” the Ministry of Petroleum said in a press release. “It is also close to existing facilities that have the capacity to receive it.” In April, the U.S. company signed a “preliminary MoU” with EGAS to boost its presence in offshore concession blocks in the Mediterranean.
In May, Chevron announced negotiations with the government to increase operations in its West Star block, an offshore site near the Cyprus border. The American giant also bid for two new blocks out of the 12 the Egyptian Natural Gas Holding Co. (EGAS) is offering. The two bids are part of a $120 million investment and excavation pledge until 2028 that Chevron made to the Egyptian government, according to Bloomberg’s Arab service, Bloomberg Asharq Business.
Also in May, American oil company Apache (aka Khalda Petroleum Co. in Egypt) announced three new oil and gas discoveries. In June, the government announced that U.S. company IPR Energy Group would drill three exploratory wells in the Wadi El Rayan area.
New reality?
Trump’s U-turn comes as clean energy is gaining momentum globally, which means oil consumption is in decline. “Oil production naturally declines at a rate of about 15% per year [due to] he world’s shifting energy mix toward ‘unconventional’ sources of oil and natural gas,” ExxonMobil’s Our View to 2050 report stated in August.
According to ExxonMobil’s calculations, “If every new car sold in the world in 2035 were electric, oil demand in 2050 would still be … the same as it was in 2010,” adding “with no new investment, global oil supplies … by 2030 … would fall from 100 million barrels a day to less than 30 million.”
By 2050, “The large majority of the world’s oil is and will be used for industrial processes, such as manufacturing and chemical production, along with heavy-duty transportation like shipping, trucking, and aviation,” the research paper said.
In the meantime, global oil supply and prices will be influenced by the increasing geopolitical volatility in the Middle East, most recently exemplified by the conflict between Israel, with help from the United States, and Iran.
“If Iran responds by disrupting oil flows through the Strait of Hormuz, targeting regional oil infrastructure, or striking U.S. military assets, the market reaction could be much more severe, potentially pushing prices up by $20 per barrel or more,” said Jorge Leon, head of geopolitical analysis at Rystad Energy, a specialized think tank.
The other factor is what OPEC+ plans to do. A June Reuters report stressed the decision would largely depend on Saudi Arabia. “Most OPEC members … appear to be producing at or near maximum capacity,” Reuters reported. “Saudi Arabia is the only one with real barrels; the rest is paper. [It] has been the driving force behind an acceleration in the group’s output increases,” which has tempered global oil price hikes so far.
This article first appeared in July’s print edition of Business Monthly.
