As the price of oil fluctuates, former President Donald Trump has called on American producers to ramp up production. His famous “drill, baby, drill” slogan from the 2016 campaign still echoes, but industry leaders are not in sync with this call. Despite Trump’s urging, U.S. oil producers are prioritizing profitability over the drive to produce more crude.
The dynamics of global oil production have shifted, and the notion of increasing supply now faces resistance. Experts highlight that oil companies, which have already been pushing production levels to historical highs, are more concerned about the economic health of their businesses than responding to political calls for higher output.
Profitability Reigns over Production Volume
While the U.S. oil sector once chased after production growth, recent economic conditions have altered priorities. American shale producers have significantly increased oil output over the last decade, but the supply glut has led to a crucial pivot: profitability is now king.
“As crude prices come down, we expect the industry revenues to go down and profits to go down,” said Darren Woods, CEO of ExxonMobil. As crude prices decline, revenues and profits suffer. Oil companies, especially those heavily invested in shale, prefer to maintain production at current levels to avoid oversupply that could send prices plummeting further.
This shift is underscored by a warning from Bryan Sheffield, a Texas oil executive who donated over $1 million to Trump’s re-election campaign. Sheffield noted that pushing for more production would “crush” stock values. The clear message from U.S. producers: they would rather hold back than overproduce at the expense of their financial stability.
Oil producers typically respond to market forces rather than political statements. Currently, most expect to expand production only if prices rise above a certain threshold, roughly $84 per barrel—a 15% increase from present levels. Until then, the “drill, baby, drill” rallying cry does not resonate in corporate boardrooms.
Trump’s Calls for Lower Prices Stir Debate Within the Oil Industry
Beyond domestic production, Trump‘s efforts to influence global oil markets have raised questions among U.S. oil producers. The former president recently reached out to Saudi Crown Prince Mohammed bin Salman, asking OPEC members to reduce oil prices, which he believes could pressure Russia to halt its invasion of Ukraine.
However, this plea has sparked skepticism. The oil market’s current landscape is complex, with OPEC already restricting output to stabilize prices. A move to decrease production further would not only harm U.S. oil revenues but could also hurt global oil prices in the long run.
Analysts expect that the oil supply glut will continue into 2025, further complicating any push to lower prices, making Trump’s proposal appear more idealistic than feasible.
With U.S. oil producers reluctant to flood the market with more crude and global players like OPEC maintaining cautious production strategies. The future of oil production in both the U.S. and abroad depends on much more than political rhetoric.
