Key Points
- OPEC+ fears U.S. oil surge under Trump’s deregulation plans.
- Rising U.S. oil production may challenge OPEC+ production strategy.
- Trump’s energy agenda could spark more drilling and LNG exports.
According to OPEC+ delegates who spoke to Reuters, new U.S. President Donald Trump’s intentions to deregulate the energy industry might lead to a spike in U.S. oil production, which has OPEC+ on edge.
OPEC+ fears U.S. oil surge under Trump’s deregulation plans
The market share of OPEC+ may be threatened by the possible expansion of U.S. oil supply, which would also have an impact on world oil prices. By reducing supply, the OPEC cartel and its allies—including Russia—have been attempting to stabilize prices.
Concerned about Trump’s expected repeal of environmental rules, an OPEC+ delegate from a U.S.-allied oil-producing nation told Reuters, “If U.S. production rises, it’s not good for us.”
Despite indications from U.S. oil producers that a significant increase in production is unlikely, Trump’s energy-friendly policies may yet lead to higher-than-expected output. Increased oil and gas drilling, accelerated licenses for energy infrastructure, and quicker approvals for LNG export projects are anticipated to be top priorities on the president-elect’s energy agenda.
Trump’s energy agenda to boost drilling, LNG exports, and permits
Experts predict that even if the expansion of U.S. shale output has slowed recently, production will still increase in 2025 over 2024. The prospect of another “drill, baby, drill” boom may be limited, though, since shale companies have turned their attention from aggressive production growth to enhancing shareholder returns. The possibility of a sharp increase in output was questioned even by ExxonMobil, one of the biggest oil producers in the United States.
However, OPEC+ is concerned that any change in policy that promotes more American production would jeopardize the group’s output plan. “Both OPEC+ production policy and the balance of the global oil market may be impacted,” a delegate stated.
There may be wider geopolitical repercussions from Trump’s energy agenda. Saudi Arabia and other OPEC+ members could boost their own oil production if U.S. sanctions against oil-producing nations like Iran and Venezuela are strictly enforced. OPEC+ may be able to modify its production quotas as a result of this change in the market.
As stated by Oilprice, with the impact of Western sanctions on Russia and shifting global demand, OPEC+ has been working to keep the oil market stable. The organization may be forced to reevaluate its current supply-cutting approach in order to maintain prices if U.S. production spikes.
Analysts caution that OPEC+ may need to prepare for increased competition and possible disruptions to its meticulously regulated supply control rules, given the anticipated increase in U.S. crude production in 2025.
