A SIMPLE but clear message is coming from the new U.S. administration that is set to take power soon: Europe must buy more American gas, or face the threat of increased tariffs on European goods and services. This is happening despite Europe being the largest buyer of U.S. oil and gas, with even greater opportunities emerging after the European Union’s boycott of Russian energy. However, the U.S. is pushing for even more, even though it cannot significantly increase crude production at the moment and is dealing with its own tight supply issues in the gas market. The EU is desperate to avoid a trade war and the imposition of tariffs, which would be devastating, especially considering the U.S. is the world’s biggest economic force. There is no doubt that the coming U.S. administration is playing tough with its closest ally.

The EU has no choice but to buy more natural gas or agricultural products to close the growing trade gap with the USA. This is a real threat, coming from a tough talking new U.S. president. Despite the fact that the U.S. is the largest supplier of LNG and oil to the European Union, providing about 49 percent of total European imports in the first half of this year, and 16 percent from Russia, the pressure is mounting. In the third quarter of this year, the U.S. supplied around 20 percent of the EU’s oil. EU officials are deeply concerned and are scrambling to import more of their gas and oil needs, with the reduction in Russian supplies, which will likely be further reduced.

The U.S. gas supply is currently tight and difficult to increase, but it is expected to rise in the future. Meanwhile, oil supply from the U.S. is poised to increase, with the country set to deliver an additional 15 to 20 million barrels to Europe within the next five years. This is a concerning figure that should set the alarm for all oil-producing nations and OPEC in the coming years. Once again, the threat of imposing up to a 20 percent tariff on all non-Chinese U.S. imports is a major concern for the European Union. The EU must exert efforts to increase its imports from the U.S., including agricultural products, to satisfy the new U.S. administration and maintain its strongest ally. The European Union must prepare for the upcoming U.S. administration, as there is no room for compromise if it hopes to avoid high tariffs. The EU is ready to take all necessary measures to navigate this challenge.

By Kamel Al-Harami

Independent Oil Analyst

Email: [email protected]