US - EU trade deal is finalized; ambitious EU energy purchase target will be hard to meet

The latest US - EU trade deal sets lofty energy import goals, but logistical, legal, and market constraints raise doubts about feasibility.

Market and Trading Calls

• We Have a Deal: The US – EU trade deal, minted over the weekend of July 26th, establishes a 15% US import tariff on most EU goods, excluding steel, and aluminium, which will remain at 50%. The EU also committed to $600bn in new foreign direct investment, although this is non-binding.
• Energy Purchase Target: As part of the deal, the EU agreed to purchase $250bn/year of US energy exports, a target that appears out of reach under current market conditions. In 2024, total EU imports of US oil, LNG, LPG, and coal amounted to roughly $80.5bn.
• Oil: In 2024, EU purchases of US oil managed to finish at $53bn. In our view, the EU could realistically add another 250 – 300 kbd in oil imports from the United States if exporters shifted away from Asia. This would add another $6 - $7bn in total US to EU oil trade, depending on the direction of WTI.
• LNG: Based on our price forecast, EU LNG purchases from the United States will amount to $37 - $41/bn per year through 2025 and 2026, respectively, up from $20bn in 2024. This factors in the loss of Russian volumes.
• LPG & Coal: these commodities play a much smaller role in the US to EU energy trade. In 2024, LPG ($3.4bn), and coal ($3.95bn) accounted for less than $10bn combined. This is likely to decline in 2025 amid weak coking coal prices.