Russia's lucrative oil and oil industry is an easy target for Europe after Trump's election victory

• Trump's presidency may pressure Russia's oil and gas industry.
• The EU is thinking about replacing Russian LNG with US shipments, potentially affecting trade dynamics.

Russia's lucrative oil and gas industry could come under greater pressure when US President-elect Donald Trump takes office.

Domestically, Trump is championing the US oil and gas industry and encouraging production — which is likely to underscore America's position as an oil and gas giant.

Meanwhile, the European Union said it could consider buying more US liquefied natural gas in a deal with Trump that would address a trade deficit. The EU doesn't have to burn bridges to negotiate with Trump, because the bloc still imports LNG from Russia.

"We still get a lot of LNG from Russia, and why not replace it with American LNG, which is cheaper for us and brings down our energy prices," European Commission President Ursula von der Leyen told reporters on Friday.

"It's something where we can get into a discussion," she said, referring to US's trade deficit with the eurozone, which reached $131.3 billion in 2022.

To be sure, it's ultimately up to EU importers to decide where to import energy supplies based on market conditions.

However, at least one EU country — Belgium — is calling on the bloc to ban Russian LNG imports to further squeeze Moscow's war chest.

The EU — which previously relied on Russian energy — banned seaborne Russian crude imports and refined petroleum products following the full-scale invasion of Ukraine in February 2022.

The EU has also cut most of its piped natural gas imports from Russia, replacing much of it with LNG from the US — which is now a top exporter of the fuel to Europe, accounting for 46% of the bloc's supply in 2023.

Russia accounts for 8% of the EU's LNG imports. Other major LNG exporters to the EU include Qatar and Algeria.

"It would be in the interest of the US that Europe continues to shun Russian fossil fuels, given the US oil and gas industry has been one of the key beneficiaries of this move," wrote Warren Patterson, the head of commodities strategy at ING, on Friday.

'Drill, baby, drill'

Trump's victory could shake up the highly politicized energy industry as he has made it clear that he supports oil production.

"I make this pledge to the great people of America: I will end the devastating inflation crisis immediately, bring down interest rates, and lower the cost of energy," Trump said in his Republican National Convention speech in July.

"We will drill, baby, drill," Trump said.

While Trump's pledges to loosen energy regulations in the US are seen as a boost to the industry, it could increase oil supplies — a negative for prices.

For consumers, lower energy prices translate to lower pump prices and electricity bills.

However, it would also pressure energy company profits and, in turn, discourage more production — which is at record levels in the US.

But there could also be other moving parts in Trump's second term, including potential sanctions on oil supplies from Iran, Venezuela, and Russia — all of which could tighten global supplies and support prices.

Even before Trump's second election, there are so many uncertainties surrounding the geopolitical economy of energy that Saudi Arabia and Russia, two of the largest oil producers, are trying to diversify their economies.

In the meantime, the broad energy market is taking a wait-and-see stance.

"Initial market reactions have been muted to Trump's election victory, but in the medium term, he is expected to reinforce the US' role as a leading oil and LNG exporter," wrote Kaushal Ramesh, the head of gas and LNG analytics at Rystad Energy research firm on Monday.