Investing.com — Former President Donald Trump’s energy agenda, anchored by the slogan “drill, baby, drill,” promises to reduce regulatory barriers, increase fossil fuel production, and lower commodity prices. .

However, the reality of US energy production remains rooted in economic decisions made by independent producers rather than political directives. These companies, accountable to their shareholders, must weigh the global dynamics of the market when considering whether to increase drilling activity.

According to Wells Fargo (NYSE:) analyst Ian Mikkelsen, while some deregulation in the oil and gas sector is likely under the Trump administration, the scale and impact of these changes remain uncertain. The process of changing regulations may face delays and competition from other legislative priorities.

In addition, the narrow majority of Republicans in Congress may limit the scope of the reforms.

“One area that can be easily addressed is the permitting process for drilling on federal land,” Mikkelsen said.

The Biden administration, in 2021, implemented stricter federal leasing and permitting policies and increased production royalties, which led to a marked decrease in the issuance of new leases. in drilling. Streamlining this process will reduce operating costs for companies operating on federal lands, which account for approximately 12% of US offshore oil production.

With the current lack of clarity about the potential scope of deregulation, Wells Fargo continues their current preferences within the energy sector.

More specifically, the company continues to recommend Integrated Oil and Midstream Energy companies for investors seeking exposure.

Oil prices rose on Wednesday as the market turned its attention to potential supply disruptions stemming from US sanctions targeting Russian energy companies and tankers carrying Russian crude.

In its monthly report on the oil market released on Wednesday, the International Energy Agency (IEA) highlighted the potential impact of the latest sanctions, noting that they could disrupt the supply and distribution of oil. in Russia. The agency added that “the full impact on the oil market and access to Russian supply is uncertain.”

Concerns over sanctions appeared to be strengthening prices, along with expectations of a potential drawdown in US oil stockpiles this week.

The key issue remains the extent to which Russian supply can be drawn from the global market and whether alternative sources or measures can compensate for any resulting shortfalls.

Meanwhile, OPEC projects that global oil demand will rise to 1.43 million barrels per day in 2026, maintaining a growth rate similar to that expected in 2025.

This forecast is consistent with OPEC’s longer-term outlook, which expects oil demand to continue growing over the next two decades. This is contrary to the view of the IEA, which predicts that demand will increase during this decade as the global transition to cleaner energy accelerates.