While US President Donald Trump's policies aim to boost oil and gas production, industry experts say limitations exist that could hinder a rapid surge. Experts point to factors like high break-even costs for shale oil, the time required for new drilling projects, and the industry's focus on maximizing profits rather than aggressive growth. Geopolitical concerns and the need to meet shareholder obligations also play a role.
PETALING JAYA: While US President Donald Trump ’s executive orders signal a push for greater oil and gas output, industry experts say structural constraints could limit an immediate surge, posing no short-term threat to global supply dynamics, prices or Malaysia’s O&G sector.
“The United States is already producing about 13.5 million barrels per day and increasing beyond this level is difficult,”group chief executive officer Ramanrao Abdullah, who spent decades with the world’s second-largest oil service company Halliburton, told StarBiz. Kenneth highlighted five key drivers that shape global O&G production – investment, decline rates, geopolitics, oil company priorities and climate-related factors.
“When Trump says “drill, baby, drill,” the reality is that big oil is drilling just to stay in the same place, not to increase production significantly,” Kenneth said. BMI, a Fitch Solutions unit, stated Trump’s moves to deregulation the energy market in the United States, expedite permit processes and rollback of environmental protections, including potential tax cuts, should all help to lower costs and incentivise spending. However, it is not within the president’s power to dictate domestic production levels.
Given the cartel holds over five million barrels a day in spare capacity, the impact on prices would be swift and severe, making the Brent crude contract decline below US$50 a barrel levels almost inevitable. “However, this would be fiscally painful for the cartel, putting a severe strain on the core Opec+ members that rely heavily on oil revenues to finance their government spending.
Anyways its believes ‘Big Oil’ and Opec+ producers are following their own agendas, and both would prefer prices to roam in the higher range of US$80 to US$90 a barrel level in 2025. He cited France’s TotalEnergies SE acquisition of SapuraOMV Upstream Sdn Bhd as a sign of investor confidence in the country.
“The tariffs will cause a reduction in consumption. That’s what’s going to impact the industry. Tariffs will cause economies to potentially taper down their plans,” he said.He also pointed out that investment flow into any country for the O&G business depends on factors such as the unit cost of production, taxation rates, and geopolitical risks.
Meanwhile, Ramanrao noted that Trump’s stance against green energy could drive higher demand for O&G, potentially pushing prices up.
OIL GAS PRODUCTION TRUMP USA OPEC ECONOMICS
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