Trump's Energy Secretary Pick Celebrated in Middle East

US President-elect Donald Trump's nomination of oil industry veteran Chris Wright as energy secretary has been met with enthusiasm in the Middle East, with one Saudi government official anonymously describing the choice as "fantastic," according to a report from S&P Global.

However, the potential for increased US oil production under Wright's leadership could complicate OPEC+'s plans to raise output without triggering a price drop, cautions Kamil al-Harami, an independent oil analyst and former Kuwait Petroleum Corp. executive. "Overall, more crude production will lower prices [and] may lead to further weakening of OPEC," al-Harami stated.

Wright, CEO of Liberty Energy, a prominent hydraulic fracturing company, is a known climate change skeptic who has criticized net-zero initiatives. His views align with those of President-elect Trump.

"Chris Wright is a tremendous pick for energy secretary but also for advancing a rational global dialogue on energy," Joseph McMonigle, secretary general of the International Energy Forum, told S&P Global. "His views and President Trump’s views are aligned on energy and transition policies. I expect we will see more cooperation on CCUS (carbon capture, utilization and storage) and other circular carbon economy technologies and big focus on energy access and affordability."

Wright's nomination comes amid the COP29 UN climate change summit, where current Energy Secretary Jennifer Granholm expressed hope for the continued existence of EV tax credits and other energy transition measures under the new administration. The Energy Information Administration, whose market outlooks influence prices, also falls under the Department of Energy's purview.

Wright's selection followed Trump's announcement of North Dakota Governor Doug Burgum as head of a new National Energy Council aimed at boosting domestic energy production. Wright is widely expected to advocate for increased fossil fuel production and electricity generation to meet rising demand.

Rachel Ziemba, geopolitical and macro-risk analyst of Ziemba Insights, notes that while Wright's focus will primarily be on domestic energy policy, Middle Eastern producers are likely to adopt a "cautiously optimistic" stance. "Wright is someone that understands the industry and is aligned with their views that fossil fuel energy is a key part of energy mix," Ziemba said.

Wright's stance on climate change aligns with major Middle Eastern oil and gas producers, who have actively pushed at COP29 for continued access to fossil fuels to meet growing demand. He has dismissed the International Energy Agency's (IEA) prediction of peak oil demand by the end of the decade, a view shared by OPEC.

"To me, it's some combination of complete ignorance and some of it has to just be evil," Wright said in a September LinkedIn post. "To get 7 billion people halfway to our lifestyle [in developed economies], requires more than doubling our global oil production," he added. He also criticized the IEA's net-zero pathway as "a sinister goal."

OPEC's World Oil Outlook projects a significant increase in oil demand by 2050, driven by growth in Asia, the Middle East, and Africa. Secretary General Haitham al-Ghais has criticized calls to eliminate fossil fuels as a "fantasy."

OPEC+ has implemented production cuts, delaying planned output increases until at least January due to subdued Chinese demand and rising production from the US and other competitors. The US is already the world's largest crude oil producer, with production expected to peak by 2030, according to S&P Global Commodity Insights.