Oil production in the US will not grow at too high a rate. This is unprofitable for the US oil companies themselves, experts say.
One of the slogans during the election campaign of the already elected US President Donald Trump was the phrase „drill, baby, drill“. Trump said that he plans to increase oil production in the country to reduce prices. Now the United States is the largest oil producer in the world. According to the Energy Information Administration (EIA) of the US Department of Energy, in 2024 oil production in the country will average 13.24 million barrels per day.
Analysts note that EIA data on the number of drained but unused wells in the US show a fairly high potential for increasing oil production in the country. According to them, however, the question arises about the expediency of increasing production. “We do not expect the US to immediately rush to increase production after Donald Trump takes office. The decline in oil prices is unprofitable for American oil companies“, experts say.
Trump will try to remove administrative, including environmental, barriers to the oil industry as much as possible. This measure will take effect in 3-4 years, at the end of his presidency. “Current production depends more on prices, and Trump threatens to reduce prices, which is completely unprofitable for oil companies. It is possible that these promises from his side will also be nothing more than rhetoric, but even without Trump, prices will creep down. Despite the fact that cost inflation will remain relatively high“, experts emphasize.
With the current supply and demand balance and forecasts for 2025, US oil producers have no economic incentive to increase production. “However, Trump's policy regarding the conflict in the Middle East and sanctioned oil (primarily Iranian) could stimulate higher oil prices and provide US producers with opportunities to increase drilling rigs“, experts suggest.
In the long term, the Trump administration's promises to significantly increase oil production are achievable. According to experts, the US already has the necessary infrastructure capacity to increase oil production to 14.5 million barrels per day. But further production growth will require investment in infrastructure, including pipelines.
Although increased US production will bring additional supply to the market, it is unlikely to lower prices below $60 per barrel, given the strategic interest in maintaining stable revenues.
“The US budget provides for rules for replenishing strategic reserves, and this price is set in the range of $60-65 per barrel. A comfortable price for the US is considered to be $70-75 per barrel, which allows the economy to develop and the budget to be replenished through tax revenues“, experts conclude.