A deal the EU negotiated with President Donald Trump's administration in a bid to avoid a major trade war committed the European bloc to purchasing $250bn/yr in US energy commodities in the next three years — a target that outstrips current US production and export capacity.
Comments from European officials indicate that the commitment is likely to focus on LNG, in the broader context of efforts by the EU to phase out the remaining imports of Russian pipeline natural gas and crude. EU trade commissioner Maros Sefcovic on Monday called the $250bn/yr target "achievable", and the White House said the deal will "strengthen the US energy dominance, reduce European reliance on adversarial sources, and narrow our trade deficit with the EU".
US exports of crude, refined products, LNG and natural gas liquids (NGLs) to the 27 members of the EU amounted to $74.3bn in 2024, based on US Department of Commerce data. The new deal would require the EU to quadruple the value of those exports — and increase the volume of exports by an even higher amount, since oil prices are lower this year than in 2024.
The US exported 1.54mn b/d of crude and 655,000 b/d of refined products to EU members last year — at a total customs value of $58bn. At current WTI prices, US crude exports to the EU would hypothetically need to increase to over 10mn b/d to achieve the US-EU deal's target — about 75pc of current total US output and significantly higher than the total US exports last year.
US LNG exports to the EU amounted to 1.7 Tcf of gas equivalent last year — about 22pc of total US LNG exports, US Energy Information Administration data show. The average LNG export price for EU destinations was $6.59/mmBtu last year, and the value of US LNG exports to EU members was $12.2bn. The total value of US LNG exports was $28bn last year.
The energy component of the US-EU trade deal is outwardly similar to the so-called "Phase 1" deal Trump's first administration signed with China in January 2020 — and is likely to encounter the same issues with enforcement as political commitments clash with market realities.
The US-China 2020 deal required Beijing to step up purchases of energy commodities by $18.5bn in 2020 and another $33.9bn in 2021. Hitting the target when the agreement was concluded in January 2020 would have required buyers in China to import an extra 1.2mn b/d at then WTI export prices. Just months later, the Covid-19 pandemic upended global oil markets and resulted in significantly lower oil prices — so achieving the export target would have required an even higher volume of US exports.
China, in the end, never reached the Phase 1 deal energy purchase target. US-China trade relations continued to worsen even in the interlude between Trump's two presidencies.
Unlike the EU, China has responded with strong countermeasures against tariffs Trump imposed earlier this year. Washington and Beijing are negotiating terms of new trade arrangements against a deadline of 10 August for the snapback of even higher tariffs.
