US President Donald Trump has been effective in rolling back regulations focused on oil and gas; but, so far, less so in actually helping the US industry.
His trade policy has created sufficient uncertainty to reduce the amount of global economic growth expected and with it the amount of growth in crude oil demand.
Lower demand forecasts have led to lower oil prices which have led to reduced capital expenditure plans which, on the current course, will eventually lead to reduced industry payrolls. Of course, laying off workers won’t do anything to help increase oil prices. Eventually earnings, and with them share prices, will also be eroded.
Coterra Energy, Diamondback Energy, EOG Resources, and Matador Resources all plan to reduce drilling. Diamondback plans to cut capital spending by $400 million in 2025, a 10% reduction from 2024.
The supply-side effects of Pres. Trump’s foreign policy have been similarly harmful.
OPEC+ has already begun increasing production, putting further pressure on prices. And the possibility of easing sanctions on some combination of Russia, Iran, and Venezuela has been mooted, potentially placing even more barrels on the market.
Of these, a deal with Iran to limit its nuclear program in exchange for relief from US sanctions seemed most likely to happen first at the time of writing. But even it still had many details to iron out, not least regarding terms of monitoring and enforcement.
Were the US and Iran to reach terms on a nuclear deal, analysts indicate that as much as 1 million b/d of additional crude production could be brought to market. Others, however, note that this could prompt OPEC+ to reconsider or at least moderate its planned production increases.
Then there’s the tariff-induced increased costs of steel and aluminum. Both drilling pipe and drilling tools will become more expensive, even as prices languish.
This development will especially affect smaller producers, which have a relatively limited capacity to absorb increased costs, no matter how much they might want to “drill, baby drill.”
An analysis by Goldman Sachs of Pres. Trump’s social media posts indicated that he’s most comfortable when oil prices are $40-50/bbl, according to Bloomberg reporting. In early May 2025, the firm’s projected average WTI price was $56/bbl for the balance of 2025 and $52/bbl for 2026.
Magic wand
The continuation of this course, however, is not inevitable. Some heretofore unguessable sequence of events could be set in motion that would prompt the current administration to apply a modicum of consistency to its energy policies and the broader economic and foreign relations policies surrounding them.
One concrete policy already being pursued is the maximization of drilling on currently public lands, whether through permitting reform, changing the designation of particular parcels, or (potentially) selling them outright. The Interior Department in April said it would no longer require the Bureau of Land Management to prepare environmental impact statements for more than 3,200 oil and gas leases in Colorado, New Mexico, North Dakota, South Dakota, Utah, and Wyoming.
But a shortage of drillable acreage has never been the problem. Millions of acres are offered and not bid on. Millions more are leased but never drilled. And public lands make up just a small fraction of the acreage potentially available for development.
Making business easier in terms of regulation does precious little if the financial incentives for engaging in it are undermined along the way. A clear indication of policy needs to occur, or a substantial part of the opportunities offered by US mineral wealth will be squandered.