It seems that many energy market experts believe that President Trump could successfully bring down oil prices, possibly even more so than during Biden’s presidency.
Currently, Brent crude prices have been stuck in the $70 range for several months. This is occurring even though Opec+ members recently decided to slow their production increases, which was seen as a way to balance expected surpluses. Interestingly, Trump’s tough stance on Iran could further limit oil supply from there. Under Biden, Iranian oil exports peaked at about 1.8 million barrels a day, while they were significantly lower under Trump’s administration at just 0.4 million barrels a day.
Team Trump appears to be banking on higher U.S. production to offset losses stemming from reduced Iranian oil availability. However, balancing low energy prices with rising domestic oil and gas production could prove challenging. U.S. shale producers now require higher prices to support their growth compared to eight years ago. Moreover, while U.S. energy production is expected to rise, it is increasingly leaning towards gas rather than oil.
It’s unlikely that the administration can realistically increase crude oil production by 3 million barrels a day over the next four years, as suggested by Trump’s Treasury nominee, Scott Bessent. The reality is that there simply aren’t enough untapped oil reserves to achieve that output. In fact, we predict only a modest increase of about 0.4 million barrels per day over the same timeframe.
The White House has limited options to boost supply quickly. They could allow more leasing of federal land for oil drilling, but options are limited and acquiring permits for offshore drilling can take years. Streamlining the permitting process for new energy projects might help, but this could be complicated due to various regulations and community concerns.
On the brighter side, easing regulations for gas pipelines could enhance production in certain areas, like Pennsylvania. Also, lifting the pause on LNG export licenses could increase America’s gas sales internationally towards the end of the decade. While outright subsidies would face political pushback, some tax reforms might provide marginal benefits to producers. Still, companies like Chevron are signaling they will be conservative with growth; they’ve already reduced investment plans and expect growth in oil output to slow to the single digits.
Interestingly, private equity-backed production might be an area to watch. Lower interest rates and Opec+ hints could prompt expansion in that sector. However, publicly traded companies are facing pressure from investors to minimize spending and maximize shareholder returns.
Additionally, consolidation in the Permian Basin is hindering crude oil development as larger firms acquire smaller ones, leading to fewer immediate projects. Production in secondary shale areas like Bakken and Eagle Ford is expected to decline as producers focus on the best-performing lands.
Gas and natural gas liquids production is anticipated to rise more quickly, driven by the demand for LNG. With new export facilities being built, prices on the Gulf Coast are likely to increase, encouraging more growth in areas like Appalachia and Haynesville. In the Permian and other regions, older shale wells are producing more gas relative to oil as they age, further boosting gas production.
Looking ahead, we project that gas output will increase significantly, with expectations of a rise of 10 billion cubic feet a day by 2028, along with growth in natural gas liquids. When measured in terms of energy content, this translates to about 2.7 million barrels a day in oil equivalent. So, while ambitious projections of a 3 million barrel increase in oil output are circulating, the reality is that much of this will come from equivalent energy gains rather than traditional oil.