IEA Does Not Believe Steel Tariffs Will Affect Global Oil Trade
The International Energy Agency’s (IEA) leadership does not believe President Donald Trump’s tariffs on imported aluminum and steel will affect the global oil trade.
“I think the impact on the global oil markets will be limited if any,” Executive Director Fatih Birol told CNBC during the ongoing CERA Week conference in Houston. “We may see some impact. There is major infrastructure construction in Texas, lots of pipelines. We do not know the [tariff] proposal yet in detail, but if there are some cost implications, this may cause some changes in the plans. But I don’t see this causing major changes in global oil markets.”
He added: “We follow us oil production really closely. In 2009, we said a silent revolution is happening in the US and it will have a lot of implications. And we see now that the silent shale revolution is very, very loud. So, as a result of that we think in the next five years to come, the US will put its stamp in the global oil market.”
Birol added that the U.S. could begin producing up to 12 million barrels per day by 2023. Current production estimates by the U.S. Energy Information Administration (EIA) put national output at 11 million barrels per day by the end of 2019.
Steel and aluminum tariffs, while likely not a severe blow to the oil industry, would hike the cost of infrastructure projects in the energy industry, analysts say.
"The real question is whether the U.S. steel industry has the capacity to supply every pipeline project in the United States," said Libby Toudouze, portfolio manager at Cushing Asset Management, according to CNBC. "Let's say in 2017, 2018 we need 300 miles of pipeline, and the U.S. steel companies' maximum capacity could crank out 100 miles of pipe. It's not reasonable for us to hold up the 200 miles of pipeline because the U.S. guys can't scale to get there," she said.