OPEC+ Eyes Trump’s Return: Concerns Over Rising US Oil Output

Image Credit: Reuters

OPEC+ is closely monitoring the potential for increased U.S. oil production if Donald Trump returns to the White House, according to group delegates. A surge in U.S. output could further erode OPEC+’s market share and undermine its efforts to stabilize prices.

 Currently, OPEC+ controls nearly half of global oil production and recently delayed plans to increase output until April 2025. The group also extended some of its supply cuts through 2026 in response to weak demand and growing production from the U.S. and other non-OPEC+ nations.

Historically, OPEC has underestimated the growth of U.S. oil production, particularly during the shale boom that propelled the U.S. to the position of the world’s largest oil producer, now accounting for one-fifth of global supply. Some OPEC+ delegates attribute their current concerns to Trump, who is expected to introduce policies favoring deregulation in the energy sector, potentially boosting U.S. oil production.

"Trump's return could be favorable for the oil industry due to less stringent environmental policies," said a delegate from an OPEC+ member aligned with the U.S. "However, increased U.S. production is a concern for us."

OPEC+ plans to gradually raise output starting in April 2025, but a surge in U.S. production could risk price declines, harming oil-dependent economies within the group. Trump’s focus on increasing domestic output is aimed at lowering energy prices and inflation, further complicating the dynamic between the U.S. and OPEC+.

“This presents a challenging situation for both sides,” said Richard Bronze, head of geopolitics at Energy Aspects. “Rising U.S. production has diminished OPEC+’s influence.”

U.S. Oil Production on the Rise

Since 2022, U.S. oil output has grown by 11%, reaching 21.6 million barrels per day (bpd), according to OPEC’s figures. By contrast, OPEC+ now accounts for 48% of global supply, down from over 55% in 2016. While OPEC+ has implemented cuts totaling 5.85 million bpd since 2022, U.S. shale producers have capitalized on these reductions, bolstering their global position.

OPEC’s latest report predicts U.S. oil supply will grow by 2.3% next year, while the International Energy Agency (IEA) projects an even faster increase of 3.5%. Meanwhile, OPEC has once again lowered its forecast for global oil demand growth, signaling shifting market dynamics.

Trump’s energy policies could boost oil demand, benefiting OPEC+, but the prospect of higher U.S. production remains a primary concern. Increased U.S. exports would reduce the country’s reliance on imports and could challenge OPEC+’s market dominance.

Some analysts, however, remain skeptical about significant U.S. production increases under Trump. Capital discipline among shale producers means they will only raise output if it is economically viable, especially as developing new oilfields requires years of investment.

"The U.S. lacks spare production capacity," said Bob McNally, president of Rapidan Energy Group and a former White House official. “Ultimately, U.S. drilling activity depends more on OPEC+ decisions in Vienna than on policies from Washington.”

 

 

 

 

 

 

 

 

 

 

 

Paraphrasing text from "Reuters" all rights reserved by the original author.