By Alex Kimani
- Despite Trump’s victory, U.S. oil production growth is expected to remain moderate due to changes in the shale industry.
- U.S. E&Ps continue to prioritize capital discipline and shareholder returns over rapid production increases.
- Incoming tariffs on steel, a key component in drilling infrastructure, and the long timeframe for federal land development, are expected to deter any significant production surge during Trump’s term.
Oil markets witnessed choppy trading in Wednesday’s session, with Brent crude for January delivery plunging before rebounding after Donald Trump defeated Kamala Harris to clinch leadership of the White House. Wall Street has expressed concerns that a second Trump term could negatively impact oil prices, with producers eager to drill and produce more when unencumbered by perceived Biden-era bureaucracy. However, another section of Wall Street is now arguing that this narrative is flawed. According to commodity experts at Standard Chartered, U.S oil production, and particularly unconventional (shale oil) production, has changed significantly from the time Trump first took office in 2017. StanChart points out that U.S. crude output clocked in at 13.40 million barrels per day (mb/d) in August 2024, an all-time high above the previous record of 3.31 mb/d set in December 2023. U.S. crude production has increased by 4.7 mb/d since the pandemic-era low of May 2020; however, it’s just 0.4 mb/d higher than the pre-pandemic high of November 2019, working out to an annual production growth rate of just 80 thousand barrels per day (kb/d) over this timeframe. Further, the growth clip is forecast to continue to slow down in the current year and in 2025. U.S. liquids supply increased by 1.605 mb/d in 2023, but StanChart has forecast growth of just 630 kb/d in 2024, slowing further to 300 kb/d in 2025.