Energy Stocks Decline Amid Trump's Tariff Rhetoric

Energy stocks fell due to President Trump's tariff rhetoric. Shell shares declined as the company warned of weaker trading in its core integrated gas division in Q2. Analysts at BNP Paribas believe oil prices may rebound in H1 2026 as supply growth moderates. US shale producers have hedged more of their supply, making them less sensitive to lower prices.

Energy stocks experienced a decline today, driven by President Trump's tariff rhetoric and Shell's warning about its core integrated gas division. Shell shares fell as the company reported weaker trading in its Integrated Gas operations for the second quarter of 2025.

Shell's Integrated Gas division is expected to produce between 900,000 and 940,000 barrels of oil equivalent per day (BOE/D) in Q2, down from 980,000 BOE/D a year ago and 927,000 BOE/D in the first quarter. The company's Integrated Gas adjusted earnings are expected to range between $1.4 billion and $1.8 billion, compared to $2.68 billion in 2024 and $1.4 billion in Q1. The outlook for Shell's Upstream production is also lower, with expected production ranging between 1.66 million and 1.76 million BOE/D, down from 1.78 million BOE/D a year ago and 1.86 million BOE/D last quarter. The company attributed the decline to scheduled maintenance and the completed sale of SPDC in Nigeria [2].

Analysts at BNP Paribas believe that oil prices may rebound in the first half of 2026 as supply growth moderates. However, the current decline in energy stocks is largely attributed to President Trump's tariff rhetoric, which has been criticized by US shale producers. The Federal Reserve Bank of Dallas's second-quarter 2025 energy survey found that nearly half of the executives surveyed expect to drill fewer wells in 2025 due to lower crude prices. The survey also highlighted the frustration of industry insiders with the Trump administration's policies, which they argue have benefited OPEC at the detriment of the domestic industry [1].

Despite the recent decline, US shale producers have hedged more of their supply, making them less sensitive to lower prices. This strategy is expected to help mitigate the impact of price volatility on their operations. The Dallas Fed survey also noted that tariffs have increased the cost of drilling and completing new wells by as much as 6% for some producers, further adding to the challenges faced by the industry.

In summary, the decline in energy stocks is a result of President Trump's tariff rhetoric and Shell's warning about its integrated gas division. While analysts expect oil prices to rebound in the first half of 2026, the current challenges faced by the industry are likely to persist in the near term.

References:
[1] https://www.argusmedia.com/en/news-and-insights/latest-market-news/2707443-drilling-slowdown-undermines-trump-s-energy-dominance
[2] https://www.investopedia.com/shell-warns-of-weakness-in-integrated-gas-business-11767308