Sunway University’s Ong Hwai Chyuan said Trump’s “drill baby, drill” policy – which advocates for increased oil and gas drilling in the US – and pressuring oil-producing nations to pump more oil, would increase supply.
An increase in supply would in turn result in a significant drop in oil prices to below US$60 per barrel, Ong, who has conducted research in energy and fuel, said.
“This decline (in profit) may result in decreased capital expenditure and exploration activities.
“Consequently, projects may become less economically viable, potentially resulting in delays or cancellations of new upstream ventures,” Ong told FMT.
He said if investors believed that the global oil market would be oversupplied for the near future due to US policies, they might hesitate to invest in new exploration or infrastructure projects in Malaysia.
For example, Ong said, the planned deepwater project might be put on hold as a result of reduced profitability.
Ong went on to say that Trump’s policies, which encouraged increased production and export capacity of fossil fuels, were meant to make the US a dominant player in the energy market.
Such policies, he said, had affected global oil markets and influenced global supply as well as pricing dynamics.
Ong said such unpredictability would make long-term planning more difficult for multinational companies and energy producers, including those in Asia and Europe.
“These initiatives will potentially affect the international supply and demand dynamics, and while Trump’s policies have not caused catastrophic disruption, they have been significant enough to alter the trajectory of energy transition and global economic stability.”
But Ong said the extent of the impact hinged on several factors, including the duration and intensity of the policies, the global demand for oil and Malaysia’s ability to adapt.
“However, revenue and investment in the O&G sector are expected to be affected.”
Still, despite the impact not being catastrophic, they would be significant enough to warrant a strategic response, he said.
Industry insiders say one strategic response would be for the organisation to be more technology driven, leveraging artificial intelligence and the digital ecosystem to unlock more value and increase productivity.
They say that by embracing digital transformation, companies can uncover new opportunities for value creation and productivity gains, while streamlining operations and reducing inefficiencies.
Advanced analytics and automation, driven by AI, allow for data-driven decision-making, better risk management, and enhanced ability to predict and respond to market shifts.
Ultimately, fostering a culture of technological innovation ensures that organisations remain agile, competitive, and well-positioned for the challenges of the evolving energy landscape.
Ong said downsizing the workforce may also be necessary, especially if a firm wants to adapt to evolving energy transition challenges and the changing global economic landscape.
While such a move would be viewed as a reaction to external pressures, it was in fact driven by several other factors, he said.
Ong said that the global energy sector was experiencing a profound transformation towards renewable and sustainable energy sources, partly driven by climate change concerns and shifting energy policies worldwide.
Trump’s policies, he added, were reshaping the global energy landscape, influencing production, export strategies, and market dynamics.