US President Donald Trump declared a national energy emergency as soon as he took office, aiming to boost energy supply. However, with oil prices hovering around $70 per barrel, the industry is showing no signs of increased production.
Industry experts say the price is not right for them to pump more crude. The latest data shows US oil production grew by just 300,000 barrels per day last year, a significant decline from the previous year’s growth rate of 900,000 barrels. West Texas Intermediate prices have been declining since Trump’s inauguration, partly due to increased “maximum pressure” on Iran.
The president’s goal is to reduce oil prices, but he faces a challenge as US shale drillers are highly sensitive to global prices. With production costs higher than conventional production and natural depletion kicking in, they are adopting a cautious approach. This discipline has led to strict financial control, with many producers tapping into untapped crude reserves.
Trump’s plan to pressure Russia by lowering oil prices may not be feasible due to the significant impact on US shale drillers. Last time prices sank to $45 per barrel, it triggered a short oil war between Russia and Saudi Arabia, which survived but had severe consequences for many US shale producers.
As the industry continues to follow its own price path, Trump’s promise of cheap oil may prove unattainable due to external factors beyond his control.
Source: https://oilprice.com/Energy/Oil-Prices/Pushback-Begins-Against-Trumps-Oil-Agenda.html