OPEC+ Cautious on Renewed U.S. Oil Output Under Donald Trump by Amit Gupta, Kedia Advisory
OPEC+ is concerned about the resurgence of U.S. oil production under Donald Trump’s presidency, which threatens to undermine their market share and efforts to stabilize prices. Despite earlier delays in raising output, the group has maintained supply cuts to support prices in a weakened demand environment. U.S. oil output has surged by 11% over recent years, with predictions for continued growth, further exacerbating the competition for market share. While Trump’s policies could boost oil demand, the risk of higher U.S. production looms large for OPEC+ countries reliant on oil revenues.
Key Highlights
* OPEC+ delays output increase due to weak demand and booming U.S. production.
* U.S. oil output has surged 11% to 21.6 million bpd since 2022.
* Trump’s return could deregulate the energy sector, increasing U.S. output.
* OPEC+ holds back 5.85 million bpd of capacity to counter U.S. growth.
* Industry focus on profitability, not capacity, may limit new U.S. supply.
OPEC+ is facing increasing challenges from a rise in U.S. oil production under Donald Trump’s potential return to the White House. Over the past years, U.S. output has surged by 11%, reaching 21.6 million barrels per day (bpd), making it a significant threat to OPEC+’s market share. The group has delayed its plans to raise output until April 2025, aiming to support prices amid weakened global demand. However, with Trump’s focus on energy deregulation, U.S. producers could ramp up production even further, posing risks to OPEC+’s strategy to maintain price stability.
The surge in U.S. production is evident as OPEC+ holds back approximately 5.85 million bpd of output capacity, despite contributing to market tightness. This is a shift from previous years where OPEC+ decisions to cut production significantly benefited the U.S. shale sector, positioning the country as a leading oil exporter. Furthermore, analysts and industry executives are skeptical that new drilling permits under Trump could immediately boost output, given the lengthy timeline for developing new oil fields.
Other news includes OPEC’s revised outlook, predicting a slight increase in U.S. supply and reducing its forecast for global oil demand growth. While there are concerns about increased U.S. production, the U.S. still faces challenges due to capital discipline and a lack of spare capacity, limiting immediate expansion. Decisions made in Vienna will likely have a more significant impact on U.S. production than policies set in Washington.
Finally
OPEC+ remains cautious about U.S. production under Trump, with risks of further market share erosion and volatile prices.
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