The E.U. to buy $750 billion of U.S. energy products. Why that's ‘absurd.'

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6 days ago

President Donald Trump said the U.S. deal on tariffs and trade with the European Union includes Brussels' agreement to buy $750 billion of U.S. energy products over the next three years, but industry analysts say the math doesn't even remotely add up.
Some energy experts have referred to that as a 'wholly unrealistic,' and even 'absurd,' number given that U.S. energy-product exports to the E.U. would have to more than triple to get there. But there are some ways to significantly boost U.S. sales of the commodities to Europe.
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'While it is possible to imagine an increased level of [energy] exports to Europe, this would be a major upheaval in our energy trade,' said Michael Lynch, president of Strategic Energy & Economic Research. 'How this is supposed to be accomplished is also unclear.'
U.S. energy exports to the E.U. totaled $78.5 billion in 2024, which was just about the same as in 2023, according to data from the Energy Information Administration shared with MarketWatch on Monday.
To get to that $750 billion figure, the E.U. would have to buy roughly $250 billion per year of energy products from the U.S. for the next three years — more than triple what it purchased in 2024.
To hit that figure, Lynch, who is also a distinguished fellow at the Energy Policy Research Institute, said he would imagine that 'all U.S. LNG [liquefied natural-gas] exports would go to Europe, doubling the current amount.' U.S. oil exports to Europe, which he said are at around 2 million barrels a day, would have to quadruple. That would mean essentially 'all' U.S. crude and product exports would have to go to Europe, he said. In 2023, the EIA said the U.S. exported 10.15 million barrels per day of petroleum to 173 countries and three U.S. territories.
The U.S. exported a total of $332.4 billion in energy-related products to select trading partners in 2024, according to the U.S. International Trade Commission. The only E.U. member in the top 10 U.S. export markets for energy-related products is France.
On X, Rory Johnston, founder of CommodityContext.com, said that 'even if the $250 bn/yr in E.U. energy purchases from the U.S. pledge wasn't absurd on its face — it is, for the record — there's still the small issue that those energy flows are determined by private-sector purchasing decisions, not Brussels.'
'So how would literally any of this work?' he asked.
Matt Smith, lead U.S. analyst at Kpler, said the $250 billion-a-year figure just to the E.U. seems to be a 'wholly unrealistic number.'
That doesn't even consider how to force European companies to purchase U.S. energy, he said. 'The economics have to work.'
Breaking it down, Smith said U.S. crude is the highest-value product among these energy exports. Europe takes in roughly 1.6 million barrels a day of U.S. crude, which equates to more than $40 billion in a year, he said.
'Even if U.S. crude exports to Europe were to ramp up materially, [that] wouldn't really move the needle' since total U.S. crude exports equate to roughly $85 million per year.
So $250 billion a year is an 'unrealistic number — even if U.S. energy was the most attractive option from a cost perspective,' Smith said.
And it isn't. The price of benchmark Russian crude in June, for example, averaged below the $60-a-barrel price cap set by the Group of Seven to reduce Russia's ability to finance its war in Ukraine, according to the International Energy Agency. On the New York Mercantile Exchange, U.S. benchmark West Texas Intermediate crude CLU25 CL.1 settled at $66.71 a barrel on Monday.
'Even if we are optimistic' in reaching that pledged-value figure, 'we only get to [roughly] $100 billion in U.S. energy exports to the E.U., said Smith.
Even so, the energy sector rallied Monday, with WTI oil futures posting a gain of 2.4%, and the Energy Select Sector SPDR Fund XLE, an exchange-traded fund that focuses on companies in the energy sector, trading up by 1%.
The First Trust Natural gas ETF FCG, which focuses on companies that get most of their revenue from natural-gas exploration and production, also traded up 2.1%. Natural-gas futures on Nymex, however, continued their decline from last week on the back of expectations for higher U.S. production. They settled Monday with a loss of 3.9%, at $2.99 per million British thermal units, the lowest since April 25, according to Dow Jones Market Data.
Crude oil and products, as well as natural-gas liquids offtake, are significantly 'bottlenecked by refinery configurations and infrastructure logistics, said Ben Hoff, global head of commodity research at Societe Generale. That means that any growth would need to really come from LNG, he said.
But 'given LNG export terminals are multi-year infrastructure undertakings and that currently sanctioned U.S. projects are only expected to double total export capacity by 2030, it is a [physically] impossibility for the E.U. to fulfill the $750 billion pledge primarily through LNG,' he said. 'The scale and speed required far exceed what is logistically, commercially or infrastructurally feasible within the deal's three-year window.'
The E.U. also 'does not have a centralized procurement mechanism for fossil energy, as energy policy remains largely a national competence under E.U. treaties,' said Hoff.
'Actual purchasing decisions are made by private firms or national entities, and in practice, market economics override political pledges — even within member states,' he said.
Phil Flynn, senior market analyst at the Price Futures Group, also believes that the E.U.'s pledge to buy more U.S. energy products would be a 'voluntary alignment,' acknowledging that it would be a 'little bit hard to enforce.'
For its part, the E.U. could back off some of its moves toward the renewable energy sector — wind, solar and hydrogen — and replace that with U.S. oil and natural gas, he said.
Some people, however, have underestimated Trump's ability to push through deals there were previously said to be impossible, said Flynn.
The president has been pushing for a ceasefire deal between Russia and Ukraine, and his efforts have included threatening Russian President Vladimir Putin with losing one of his major export markets, which of course is the E.U.,' he said. The E.U. has already reduced its reliance on Russian energy imports from about 40% of its natural-gas supplies to 10%, he said.
So another step that can be taken to bring the E.U. closer to its goal is the U.S. potentially filling in for some of that lost supply, Flynn said, adding that U.S. exports of LNG to Europe have climbed to record highs. The U.S. was the largest supplier of LNG to Europe in 2023, according to the EIA.
In a statement on the U.S.-E.U. trade deal, European Commission President Ursula von der Leyen said the E.U. will 'replace Russian gas and oil with significant purchases of U.S. LNG, oil and nuclear fuels.'
Flynn highlighted the mention of that shift to U.S. nuclear fuels, which has the potential to make a significant impact. Nuclear power plants generated nearly 23% of total electricity produced in the E.U. in 2023, according to E.U. data. Russia, meanwhile, is among the world's biggest producers of nuclear fuel.
'If there are plans to more rapidly expand Europe's nuclear power capacity by utilizing U.S.-based companies, and the power-plant construction, operation, long-term fuel fulfillment contracts, and future reactor services (some of which can be decades long) are all included in that $750 [billion] 'headline number,'' then there could be a case made that the 'pulled forward dollar-amount of future operations could boost the value of the deal,' Tyler Richey, co-editor at Sevens Report Research, told MarketWatch.
However, that scenario would require some 'financial engineering' to achieve the $750 billion, which would 'leave the realistic dollar amount of the deal carrying an asterisk based on the three-year timeline mentioned,' said Richey.
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