Keystone XL Pipeline: Donald Trump expressed support for building the Keystone XL Pipeline, offering easy regulatory approvals if a company took on the project. The pipeline, originally proposed in 2008, was designed to carry oil from Canada's tar sands to U.S. refiners but faced opposition from environmentalists. In 2021, President Biden revoked a key permit, halting the project. Trump’s social media post encouraged the company behind the pipeline, TC Energy, to return to America for fast approval and an immediate start. The pipeline had been delayed due to opposition from U.S. landowners, Native American tribes, and environmental groups.

American Petroleum Institute: The American Petroleum Institute (API) is advocating for a nationwide policy on higher-ethanol gasoline blends after the Trump administration announced plans to expand E15 sales in certain Midwestern states. On February 21, the U.S. Environmental Protection Agency announced it would maintain an April 28 implementation date for a request from eight Midwestern governors to permit year-round sales of gasoline with 15% ethanol, also known as E15. This policy change is intended to allow both E15 and the more common E10 blend to be sold during the summer, overcoming restrictions that previously kept E15 out of the market. Biofuel producers, along with the API, argue for a nationwide solution, as a fragmented market could lead to supply disruptions. API emphasized that Congressional action is needed to create a nationwide policy that would prevent inconsistent state-by-state regulations. A bipartisan group of U.S. senators has reintroduced a bill that would allow nationwide E15 sales, while some oil groups oppose the EPA's decision, warning of potential cost increases and supply disruptions. The EPA's action applies to eight Midwestern states but allows for one-year delays for states requesting additional compliance time.

U.S. Production: Diamondback Energy exceeded Wall Street expectations for its fourth-quarter profit, benefiting from higher production that helped mitigate a 9% decline in oil prices. The company’s production nearly doubled to an average of 883,424 barrels of oil equivalent per day (boepd), which contributed to a 3% increase in its share price, reaching $159.95 in extended trading. U.S. oil production reached a record 13.6 million barrels per day in December, aided by improved efficiencies. Diamondback's CEO, Travis Stice, announced he would step down in 2025 after 13 years in the role, with finance head Kaes Van't Hof slated to succeed him. The company also revealed plans to acquire units of Double Eagle for $4.08 billion, expanding its position in the Permian Basin. Earlier in September, Diamondback completed a $26 billion acquisition of Endeavor Energy, making it the third-largest oil producer in the Permian, trailing Exxon Mobil and Chevron. For the upcoming year, Diamondback expects net production between 883,000 and 909,000 boepd, with capital expenditure forecast between $3.8 billion and $4.2 billion, slightly below Wall Street’s $4.15 billion estimate.

Market Overview: Oil prices dipped on Tuesday due to U.S. President Donald Trump’s foreign policies, including his efforts for peace in Ukraine, tariff disputes, and sanctions on Iran. U.S. West Texas Intermediate crude futures fell by 0.8% to $70.16 per barrel, following a slight gain on Monday. Trump’s potential peace deal with Moscow could lead to lifting sanctions on Russia, which might flood the market with additional oil supply. Additionally, the impending tariffs on Canadian and Mexican imports are expected to negatively impact global oil demand growth. Meanwhile, Trump's ongoing sanctions against Iran continue to limit its oil exports, maintaining oil prices within a range of $70 to $82 per barrel.

The International Energy Agency (IEA) predicts that global oil supply growth in 2025 will surpass demand, which is expected to increase by 1.1 million bpd. OPEC sees a slight advantage from global oil inventory trends, with stocks likely rising if production outpaces demand, and additional OPEC+ supplies accelerating this buildup. OPEC+ faces a tough decision: delaying production cuts further offers limited upside since spare capacity is already stabilizing prices, but holding back output increases economic pressure on producers. A delay could anger President Trump, while boosting production in a well-supplied market might lead to a drop in oil prices. In the end, OPEC+ might opt for another delay, though this could harm its credibility and market share even further.

Oil prices fell about 2% to a two-month low, with U.S. West Texas Intermediate (WTI) crude dropping 2.5% to $68.93, its lowest since December 10. This decline was driven by weak economic data from the U.S. and Germany, raising concerns over slower energy demand. In the U.S., consumer confidence dropped sharply in February, and inflation expectations surged, leading to worries that the Federal Reserve might maintain higher interest rates, which could slow economic growth and energy demand. President Trump's tariff plans on Canadian and Mexican imports, set to begin March 4, are expected to reduce oil supplies, potentially boosting prices. However, analysts warn that these tariffs may negatively impact global economic growth and lead to lower oil demand revisions. Meanwhile, Germany's economy contracted by 0.2% in the final quarter of 2024, further adding to economic concerns. German election winner Friedrich Merz's decision to delay reforms to the country's borrowing limits also weighed on investor sentiment.