Oil & Gas

Despite growing complaints from the US shale industry over depressed oil prices, President Donald Trump remains committed to keeping crude as cheap as possible. This stance, while popular among American consumers, is putting increasing pressure on domestic producers, particularly in the shale sector. Industry observers argue that Trump’s focus on maintaining low oil prices benefits Gulf producers like Saudi Arabia and the UAE, allowing them to unwind Opec+ production cuts without facing backlash from Washington. According to Karen Young of Columbia University’s Center on Global Energy Policy, Trump prioritizes low oil prices over the interests of US shale producers, revealing a disconnect between White House rhetoric and industry realities.

Oil prices have been on a downward trajectory, with West Texas Intermediate (WTI) crude falling below $63.4 per barrel and Brent sliding to $66.6. Contributing to this decline is a combination of weaker global demand and increased output from both Opec+ and non-Opec producers. The US Energy Information Administration (EIA) projects Brent to dip to around $50 per barrel early next year, with US production expected to decline by 2026. Fracking executives are already scaling back spending and drilling efforts, claiming they’ve shifted from the era of “drill, baby, drill” to a reluctant “wait, baby, wait,” as the price war intensifies.

Despite having Energy Secretary Chris Wright, a shale industry veteran, in his administration, Trump’s commitment to cheap energy appears stronger than his support for domestic producers. Rachel Ziemba of Ziemba Insights highlights the contradiction in Trump’s energy policy: while aiming to boost energy exports, he continues to favor low oil prices to tame inflation and support broader economic growth. This approach could lead to reduced investment and activity in the shale sector, even as Trump encourages GCC countries to invest more in the US and buy American exports.

Industry experts warn that while Gulf allies benefit from this situation now, it could backfire if oil prices fall too low. ConocoPhillips CEO Ryan Lance has warned that US shale production will plateau or decline at prices in the low $60s or below. The Dallas Fed's Energy Survey places the shale breakeven price at $63 per barrel. Colby Connelly of the Middle East Institute sees the current scenario as favorable for Gulf producers aligned with Trump, but cautions that any sharp price drop could provoke a US response. Kristian Coates Ulrichsen of the Baker Institute adds that if oil drops below $60, it could strain US-Gulf relations, testing the resilience of these strategic alliances.