Wall Street will stymie Donald Trump’s US oil surge plan, shale bosses say

The call for a new oil boom will be fueled by Wall Street’s reluctance to settle for another shale drilling rig, it has warned.

General us lubricate In Trump’s second term, output will rise to less than 1.3 million bpd, said Rystad Energy and Wood Mackenzie, which reached 1.9 bpd during the shale bonanza years of the previous decade.

Executives noted that investor pressure on companies and the economic realities of the industry always see oil prices as obstacles to overcome to usher in the era of “American Energy Dominance.”

“The incentive, if you will, is to just drill, baby, drill. I just don’t believe companies are going to do that,” said Will Vanlon, chief executive of private equity group Quantum Energy Partners, a shale major. one of the contributors.

“Wall Street is going to dictate – and you know what. They have a financial agenda. They have zero incentive, basically, to run these businesses, to go and dig more wells.” Vanlon said.

The reality on the ground can be a disappointment Trumpetwho’s betting that a big jump in oil supply can push back inflation, making goods and fuel cheaper?

“We’ve lowered prices. We’re going to be a rich nation again, and it’s the liquid gold under our feet that will help us do that,” the President said in his inaugural address on Monday.

In Davos on Thursday, he also called on the OPEC cartel to cut oil prices, suggesting it would allow central banks to cut interest rates “immediately”.

But lower oil and gas prices will make shale companies more profitable and less likely to follow Trump’s order, “drill, baby, drill,” executives warned.

“Prices will be a bigger signal than politics,” said Ben Dell, managing partner at Kimmeridge, an energy investment firm that owns shale assets in the world’s most productive oil basin.

After US oil output fell last year, the Energy Information Administration expects output growth to increase by just 2.6 percent through 2025.

Some shale producers also fear that the best places have been removed from more than a decade of exploration in states such as Texas and North Dakota.

After his inauguration this week, Trump signed executive orders to “unleash” new oil and gas supplies and declare a “national energy emergency.” He has also moved to eliminate Biden-era regulations that saw concessionaires increase their spending and restrict operations. :

But leaders warned that even Trump’s full support for fossil fuel divestment could have limited impact.

“As far as input management is very favorable around energy and power. We don’t see a significant change in activity going forward,” said David Shorelem of Permifily Services, an oilfield services company.

The producers’ reluctance comes after two decades of rising growth and sometimes punishing volatility in oil prices.

In the past 15 years, US oil and gas production has exploded as drillers have found ways to unlock vast deposits locked in. Wall Street has funded a drilling race that has made the US the world’s largest oil and gas producer.

But brutal price crashes in 2014 and 2020 triggered widespread bankruptcies, a more cautious approach by investors and a change in the behavior of producers. Especially in softer crude prices.

A recent Kansas City Federal Reserve study found the average U.S. oil price needed for a significant increase in drilling was $84, versus about $74 a barrel.

JPMORGAN predicts that US oil prices will fall to $64 by the end of this year and “slowly creep back” in 2026.

“If prices are anemic, you can remove all the red tape you want. It’s not going to move the root on production,” said Hasan Elich, director of corporate and transactional research at S&P Global Commodity Insights.

America’s second largest oil producer Chevron – a huge shale investor – plans to cut costs this year For the first time since the pandemic The oil crash, with a budget of $1,525 in 2025, up from $15.5 billion last year, will increase Exxon’s capex in the coming years.

Conocophillips expects to reduce costs by 500 million dollars from the previous year, and the occupied oil and oil resources should have a level of activity that is expected by “Wall Street”.

“The shareholders of these energy stocks. A series of If you do more [capital spending] than they will allow, they scream bloody murder and sell your shares, “says Colley Smad, the chief executive officer of Media Capital Management, including Chevron and Occidental Petroleum.