Members of the Organisation of the Petroleum Exporting Countries (OPEC)+ are expressing concern over a potential resurgence in US oil production when Donald Trump returns to the presidency, reported Reuters.
This could challenge the group's market share and undermine its efforts to manage oil prices.
OPEC+, which supplies around half of the world’s oil, delayed its output increase to April due to weak demand and rising non-OPEC+ production, including the US. Additionally, the group extended some supply cuts until 2026 amid booming US and non-OPEC+ output.
Historically, OPEC has underestimated the growth of US oil production, particularly during the shale boom that positioned the US as the top global producer.
With the US now supplying one-fifth of global oil, some OPEC+ delegates link the optimistic outlook for US oil to Trump's energy deregulation plans, announced after an election focused on economic issues.
A delegate from a US ally OPEC+ member was quoted by Reuters as saying: “I think a return of Trump is good news for the oil industry, with possibly less stringent environmental policies. But we may see higher production in the US, which is not good for us.”
Rising US output could disrupt OPEC+ plans to increase production from April 2025, risking price drops that would harm oil-dependent members.
Energy Aspects' head of geopolitics, Richard Bronze, was quoted by Reuters as saying: “This is a potentially difficult dynamic for both sides. OPEC+ has faced a big challenge from rising US production, which has reduced the group's influence.”
The US president-elect's aim to boost output to reduce energy prices and inflation adds another layer to OPEC+'s challenge.
The organisation is currently withholding 5.85mbbl/d of capacity after cuts initiated in 2022. US oil output has already seen an 11% rise to 21.6mbbl/d over the past two years, according to OPEC data.
OPEC's recent report anticipates a 2.3% increase in US supply next year, while also revising down its global oil demand growth forecast.
The International Energy Agency (IEA) projects an even faster 3.5% increase in US output next year.
Bronze added: “This is a potentially difficult dynamic for both sides. OPEC+ has faced a big challenge from rising US production, which has reduced the group's influence.”
However, not all industry experts are convinced of a significant rise in US production under Trump.
Exxon's upstream division head points out that shale producers are prioritising financial discipline and will likely expand only if it proves profitable, especially if oil prices fall.
Furthermore, the development of new oilfields is a lengthy process, indicating that immediate increases in production due to Trump's drilling permits are unlikely.
