Wall Street will block Donald Trump’s plans to increase US oil prices, Shell executives said

Donald Trump’s call for a new oil hike will be thwarted by Wall Street’s reluctance to approve another drilling boom, Shell bosses have warned.

Rystad Energy and Wood Mackenzie said total US oil production would rise below 1.3mn b/d during Trump’s second term, below the 1.9mn b/d increase achieved by Joe Biden and 1.3mn b/d in Trump’s second term. The last decade.

Investors say pressure on companies and the ever-present economic realities of a sector in oil prices will prevent Trump from ushering in an era of “American energy supremacy.”

“The incentive, if you will, to just screw it up, baby, . . . I don’t believe companies will do that,” said Will VanLoh, CEO of private equity firm Quantum Energy Partners, one of the shale sector’s largest investors.

“Wall Street rules here — and you know what? They don’t have a political agenda. They have a financial agenda. . . . They have no incentive to tell the management teams that run these businesses to go dig more holes,” Vanloh said.

The reality on the ground could be depressing for Trump, who is betting that a big jump in oil supply could hit U.S. inflation by making commodities and fuel cheaper.

“We will keep the price down. . . We will be a rich nation again and it is the liquid gold under our feet that will help us do that,” the president said in his opening remarks on Monday.

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

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

“Price will be a bigger signal than politics,” said Ben Dale, managing partner of Kimmeridge Energy Investments, which owns Shell assets including the Permian Basin in Texas.

After peaking last year, the Energy Information Administration expects U.S. oil production to grow 2.6 percent to 13.6 million b/d in 2025, before growing less than 1 percent in 2026 due to price pressures.

Some shale producers are concerned that the best places for shale exploration in states like Texas and North Dakota have been tapped for more than a decade.

After taking the oath of office this week, Trump signed executive orders to “freeze” new oil and gas supplies and declare a “national energy emergency.” He also moved to eliminate Biden-era regulations that increased drilling costs and restricted movement.

But even Trump’s full support for fossil fuels and deregulation could have limited impact, the executives warned.

“As if the incoming administration is very comfortable around labor and power . . . “We don’t see a significant change in activity levels,” said David Scholermer, chief financial officer of ProPetro, an oilfield services company in the Permian.

The producers’ reluctance comes after two decades of high growth – and sometimes punishing oil price volatility.

U.S. oil and gas production has exploded over the past 15 years as miners have found ways to unlock vast reserves locked in shale rock. Wall Street financed the drilling boom that made the United States the world’s largest oil and gas producer.

But in the year Brutal price falls in 2014 and 2020 led to widespread losses, a more cautious approach from investors and a change in producer behavior – especially in the face of soft crude prices.

According to a recent study by the Federal Reserve in Kansas City, the average US oil price needed for a major increase in drilling is $84 a barrel, compared to $74 a barrel today.

JPMorgan predicts that US oil prices will fall to $64 a barrel by the end of this year and that shale activity will slow to “weakening” in 2026.

“If prices are anemic, you can remove all the red tape you want. It doesn’t move the needle on production,” said Hassan Eltori, director of companies and marketing research at S&P Global Commodity Insights.

America’s second largest oil producer Chevron – a giant shale investor – plans to cut spending this year for the first time since the pandemic oil crisis, budgeting $14.5bn-$15.5bn for 2025, down from $15.5bn-$16.5bn last year. Exxon, by comparison, will raise its cap in the coming years.

ConocoPhillips expects to cut costs by $500 million from last year, and Occidental Petroleum and EOG Resources are expected to keep operating levels somewhat flat — decisions designed to please Wall Street.

“The shareholders of these power stocks . . . If they do (capital spending) more than they’re allowed to, they’re going to scream bloody murder and sell your stock,” said Cole Smead, CEO of Smead Capital Management, which invests in a handful of oil companies, including Chevron and Occidental Petroleum.