Trump Calls for Increased Oil Production to Lower Prices: U.S. and Saudi Officials Hesitant

Challenges to Expanding U.S. Shale Oil Production and Global Oil Market Dynamics / Reuters 

U.S. President Donald Trump’s call for boosting oil production to reduce energy costs faces strong resistance not only from U.S. shale gas producers but also from the world’s largest oil producer, Saudi Arabia. Despite Trump’s consistent push for increased domestic oil drilling, a revival of the "Drill, Baby, Drill" policy during his campaign, convincing industry leaders to expand production appears to be a difficult task.

On February 3, 2025, The Wall Street Journal (WSJ) reported that White House advisers have acknowledged the reluctance of U.S. shale gas producers to increase output. Despite Trump’s promise to slash energy prices by ramping up domestic oil drilling, industry leaders have expressed significant opposition. They argue that the current oil prices are already at a relatively low level, and expanding production would not be economically viable.

Shale gas companies have emphasized that current oil prices are already in a stable range. As of the latest figures, West Texas Intermediate (WTI) crude oil futures are trading at around $72 per barrel, a considerable decrease from the peak of over $100 per barrel seen in 2022. The memory of the oil price crash during the early stages of the COVID-19 pandemic, when prices plummeted to as low as $30 per barrel, still lingers within the industry. Many shale gas companies faced bankruptcy as a result of these price fluctuations, and maintaining a balanced price level is considered vital for their long-term sustainability. A representative from a major oil company told WSJ, "Firms are no longer willing to pursue growth at the expense of their financial stability."

In light of the U.S. domestic industry’s resistance, the Trump administration is now turning to other oil-producing countries, particularly Saudi Arabia, as an alternative. During the World Economic Forum (WEF) in Davos last month, Trump stated he would urge Saudi Arabia and the Organization of the Petroleum Exporting Countries (OPEC) to lower oil prices. Furthermore, Saudi Arabia is expected to be one of the first countries visited during Trump’s upcoming overseas tour.

However, there is significant opposition from Saudi Arabia and OPEC to increasing oil production. The Trump administration has indicated that it wants oil prices to fall to $45 per barrel, but Saudi Arabia's painful experience with price drops below this level in 2020, during a market share battle with Russia, makes the Kingdom cautious. The WSJ cites sources saying that Saudi Arabia is unlikely to hastily increase production, fearing a repeat of the past supply glut that caused significant market instability.

Trump’s consistent demand for increased oil production stems from his broader economic strategy, which includes using lower oil prices to tackle inflation and potentially lower interest rates for economic stimulation. This would also help the U.S. position itself more strongly in dealing with countries like Russia and Iran, which are major players in the oil market and have been subject to U.S. sanctions. Additionally, the U.S. could gain leverage in the ongoing trade disputes with Canada, particularly in the energy sector.

Experts believe that while Trump’s pro-energy policies could slightly increase U.S. shale oil production, it is unlikely that a "shale boom" of the same magnitude seen in the past will occur. Ed Crooks, Vice President of U.S. Operations at the energy consulting firm Wood Mackenzie, told WSJ that while improvements in production economics could make an increase in output feasible, "a dramatic change in production economics is not expected."

As the global oil market continues to evolve, the balancing act between production, pricing, and geopolitical influence will remain a critical issue. Both U.S. shale producers and Saudi Arabia, with their respective economic priorities and challenges, will play key roles in shaping the future of global energy markets.