Trump promised “oil power,” but the US government is already preparing to cut production
11 June 13:00
In 2026, US oil production will fall for the first time since the COVID-19 pandemic. This forecast was released by the U.S. Energy Information Administration (EIA), which is part of the Department of Energy. This casts doubt on the energy strategy of US President Donald Trump, who promised to “revive the oil power” of the country. This is reported by the Financial Times, "Komersant Ukrainian" reports.
According to the EIA’s updated monthly report, daily production from the current record 13.5 million barrels will decline to about 13.3 million barrels by the end of 2026. The reason for the projected decline is the fall in oil prices and a decrease in drilling activity.
“Due to the decline in the number of active rigs, we forecast that operators in the US will drill and complete fewer wells through 2026,”
– the report says.
According to preliminary estimates, the reduction in the number of drilling rigs was “significantly greater than expected.”
Читайте нас у Telegram: головні новини коротко
Disappointment with Trump
The government released this gloomy forecast just a few months after Donald Trump’s re-election. During his campaign, he promised to restart American production, increase oil production, and lower energy prices.
Over the past two decades, the United States has become the world’s largest oil and gas producer, thanks in part to the shale oil boom. The last annual decline in production was observed in 2021, amid the pandemic in Trump’s first term in office. After that, the industry recovered due to rising oil prices under the Joe Biden administration.
The new EIA forecast echoes the estimates of market participants themselves. The industry is under pressure from increased supplies from OPEC countries and concerns about the possible consequences of Trump’s trade policy for the global economy, which leads to a further drop in oil prices.
In addition, the new import duties imposed by the Trump administration on steel and aluminum increase the costs of oil companies. This negatively affects profitability, market participants say.
According to Baker Hughes, as of last week, there were 442 oil rigs in the United States, 9 less than a week earlier and 50 less than a year ago.
Forecasts
On Tuesday, the price of West Texas Intermediate (WTI) settled at $64.98 per barrel, 17% below this year’s high and below the profitable level for most shale oil companies. According to the EIA’s forecast, by 2026, global oil prices could fall to less than $60 per barrel.
“The current administration is creating a lot of chaos. I am very concerned about the lack of a clear strategy,”
– said Wil Van Lo, head of Quantum Capital Group, one of the largest players in the shale sector, at an energy conference in Houston last week.
S&P Global Commodity Insights suggests that the drop in production could be even deeper. According to their estimates, from mid-2025 to the end of 2026, US production could decline by 640 thousand barrels per day, which is more than some OPEC member countries produce.
Therefore, the United States will, of course, remain the largest oil producer in the world. But a tangible breakthrough to “oil power,” whatever that means in Trump’s mind, is not likely to happen. At least in the near future.
Читайте нас у Telegram: головні новини коротко