RESEARCH

The One Big Beautiful Bil Act (OBBBA) enshrines the energy policy sea change under President Donald Trump. Low-carbon tax credits – like solar, wind and electric vehicles (EVs) – will be unwound more quickly or eliminated, hitting the beleaguered offshore wind and EV sectors hard. Yet, CCS tax credits were enhanced – boosting blue hydrogen – while nuclear, geothermal and sustainable aviation fuel credits were extended. In the traditional hydrocarbon space, the OBBBA mandates new leasing on federal lands, with a particular focus on Alaska and the Gulf of Mexico. It also lowers royalty rates and restores the full intangible drilling cost deduction, providing a welcome boost to the oil industry.

Group strategy is likely to become more fluid, with the first tranche of voluntary cuts unwound this month. Yet the group will still likely take a more cautious approach, even with its consistently bullish view of demand. Its upcoming meeting, to be held among voluntary cut participants, may be used to open discussions on when the group can confidently begin unwinding its next phase of 1.66 million b/d voluntary cuts. A pause could follow if market conditions are not seen as conducive to short-term tapering, but we see any reversal of its new strategy to regain market share as unlikely.

The July 2025 update includes the latest on project developments, new long-term LNG supply agreements and links to relevant Energy Intelligence coverage.

US President Donald Trump is advancing his protectionist trade agenda. Tariffs for many countries without an agreement are rising beyond those proposed in April, while many deals include rates above pre-Trump levels. Washington is also putting forward new sectoral tariffs and expanding their use to advance geopolitical goals. We expect extended uncertainty as questions about the duration and scope of tariffs swirl. The impacts – including increased inflation and lower job growth – will rise over the course of the year. Many deals aim to boost US energy exports and investment, but the viability of these provisions is questionable. Other policies, like steel tariffs, will weigh on the sector.

Upstream M&A activity reached $43.1 billion in the second quarter of 2025, outpacing the prior four quarters. The top deal of the quarter was the XRG-led consortium bid for Santos for $18.7 billion. If concluded, it will be the largest deal so far in 2025 and the largest Asia-Pacific deal in several years. North American shale consolidation continued this quarter, with total regional deals topping $17.2 billion. Beyond the high-value transactions, several players advanced divestment targets, while strategic exploration farm-in deals and new acreage awards were also prominent.