U.S. President’s speech reaffirms campaign promises to focus on fossil fuels, countering global decarbonization trends
01/21/2025
In his inaugural address on Monday (20), U.S. President Donald Trump reaffirmed his administration’s intent to prioritize hydrocarbon production over renewable energy sources. Mr. Trump announced plans to declare a national energy emergency, signaling a shift away from transitioning to a low-carbon economy and emphasizing fossil fuels such as oil and gas.
“The inflation crisis was caused by excessive spending and skyrocketing energy prices. Therefore, today I declare a national energy emergency. We will drill, baby, drill,” he said, referencing oil and gas field exploration—a central theme of his campaign. Mr. Trump outlined a strategy to replenish U.S. strategic reserves and increase exports.
While his commitment to boosting U.S. oil exports was clear, its impact on Brazil’s market appears limited, according to Décio Oddone, a former managing director of Brazil’s National Petroleum Agency (ANP). Mr. Oddone said that Brazilian oil differs from U.S. oil, ensuring demand for both.
Felipe Perez, an analyst at S&P, noted that the Brazil-U.S. relationship would hinge on Mr. Trump’s tariff policies. Other factors, such as Brazil’s focus on local content in the oil industry and strengthening ties with BRICS nations (Russia, India, China, and South Africa), will also play a role, he added.
The global impact of Mr. Trump’s measures on oil prices remains uncertain. On Monday (20), U.S. crude (WTI) fell 2.35% to $75.57 per barrel, while Brent crude, traded in London, declined 0.59% to $79.10.
Analysts interviewed by Valor believe it’s too early to predict oil price trends. Victor Arduin, risk management manager for energy and currency at Hedgepoint, said Mr. Trump’s decisions might not affect prices in the short term. However, an increase in U.S. supply could drive prices lower in the medium term. “If regulations are relaxed, U.S. production—currently at approximately 13 million barrels per day—could expand,” Mr. Arduin noted.
According to Mr. Arduin, the energy emergency scenario mentioned by Mr. Trump creates favorable conditions for expanding U.S. production. The impact of his measures on prices will also depend on decisions regarding sanctions on Iran and Russia, as well as relations with Venezuela, experts said.
A potential decline in oil prices could challenge Brazil’s trade balance, according to Mr. Arduin. Oil became Brazil’s top export item in 2024, with exports totaling $44.8 billion—a 5.23% increase from 2023—accounting for 13.3% of the country’s total shipments, per the Ministry of Development, Industry, and Trade (MDIC).
“The Brazilian trade balance, currently benefiting from higher prices and increased oil output, could face difficulties,” Mr. Arduin pointed out. If prices fall, Brazil would need to significantly ramp up production to maintain oil’s contribution to the trade balance—a challenging task without investments in expanding reserves.
Brazil’s oil production is projected to reach 3.6 million barrels per day by 2025, a 6% increase from the 2024 average of 3.4 million barrels per day, according to the Brazilian Institute of Petroleum (IBP).
As global forums discuss climate change mitigation, Mr. Trump’s statements contradict the global agenda. Mr. Oddone, currently the CEO of Brava Energia, believes Mr. Trump’s actions could slow the energy transition. “His measures will likely cool renewable energy plans, especially in areas with strong U.S. influence,” Mr. Oddone said. In addition to declaring the exit from the Paris Agreement, the U.S. President is expected to roll back environmental regulations governing oil activities.
Brazil’s Environment Minister Marina Silva, who leads the government’s environmental policy under President Lula, expected strong rhetoric from Mr. Trump. In a statement, Ms. Silva said Mr. Trump’s speech confirmed pessimistic forecasts about upcoming challenges. “His initial announcements contradict efforts for energy transition, climate change mitigation, and the promotion of renewable energy,” Ms. Silva remarked. She described the coming times as “challenging” but emphasized the importance of information, commitment to life, and political negotiation.
The Brazilian government believes President Trump’s measures will be tempered to avoid harming the U.S. economy. Officials close to Ms. Silva noted that formally withdrawing from the Paris Agreement requires a year’s notice, limiting its impact on the upcoming COP30 climate conference, scheduled for November in Belém, Pará.
Brazil’s environmental team is confident that the fight against climate change will have broad international support, particularly from the European Union and emerging economies. That reinforces the notion that energy transition policies are an “irreversible path.”
Observers also anticipate resistance from U.S. state governors heavily invested in renewable energy sources such as wind and solar. These subnational actors may oppose Mr. Trump’s fossil fuel agenda.
Mr. Trump’s comments are expected to reverberate at the World Economic Forum in Davos, Switzerland, which began Monday (20). Energy Minister Alexandre Silveira, representing Brazil, was reportedly instructed by President Lula to position Brazil as a safe destination for renewable energy investments.
In Davos, Mr. Silveira will highlight opportunities in green hydrogen, biofuels, and solar and wind power—key government strategies to drive economic growth, job creation, and income generation. The minister, the sole high-ranking federal official attending the forum, will participate in a panel on Brazil’s energy market—on Tuesday (21)—and meet with international executives and delegations.
*By Kariny Leal e Rafael Bitencourt — Rio de Janeiro, Brasília
Source: Valor International