Hvalbye warned in the report that such a ramp-up could drive crude prices below $50 per barrel but added that it “is considered unrealistic”.
“U.S. producers understand the strategic risks involved, particularly with OPEC+ holding an estimated five to six million barrels of spare capacity,” the analyst said in the report.
“A significant production increase by the U.S. would likely provoke a strong response from OPEC+, potentially flooding the market to protect market share,” he added.
“Such a scenario would lead to sharp price declines, ultimately punishing U.S. production rather than fostering growth. This dynamic makes the proposed ramp-up highly unlikely,” he went on to state.
In a separate report sent to Rigzone on Tuesday by Standard Chartered Bank Commodities Research Head Paul Horsnell, analysts at the bank, including Horsnell, highlighted that, on June 6, Scott Bessent, who was recently nominated Treasury Secretary by the Trump team, spoke at a conference at the Manhattan Institute. The analysts outlined that, following his nomination, Bessent’s session “was scrutinized as a potential guide to policy”.
“During that talk, Bessent was asked which version of the late Shinzo Abe’s three arrows economic plan he would recommend to an incoming President Trump,” the analysts noted in the report.
“Bessent (an admirer of Abe) put forward the three targets of three percent economic growth, cutting the budget deficit by three percent of GDP by the end of the administration, and ‘three million more oil barrels equivalent a day from U.S. energy production’,” they added.
“Much of the commentary on Bessent’s nomination seized on the third arrow as implying a target to lift U.S. crude oil production by three million barrels per day, raising it 30 percent to about 16.5 million barrels per day by 2028. We think this interpretation is incorrect, with the key words in Bessent’s description of the arrow being ‘equivalent’ and ‘energy’,” they continued.
The analysts went on to state in the report that the addition of three million per barrels of oil equivalent to U.S. energy production is a significantly less ambitious target, “even if we interpret energy production in this context as solely oil and gas”.
“U.S. oil and gas output is currently about 40.7 million barrels of oil equivalent per day,” the analysts highlighted in the report.
“It has grown by an average of about 123,000 barrels of oil equivalent per day per month since 2015; at that rate, three million barrels of oil equivalent per day would be added in less than 25 months,” they said.
“Forty-one percent of the post-2015 increase has come from natural gas, 28 percent from natural gas liquids (NGLs), just 28 percent from crude oil, and three percent from other oil liquids (mainly corn ethanol),” they added.
“We think the crude oil element of the next three million barrels of oil equivalent per day increase is likely to be significantly less than 20 percent, with natural gas likely to be the main instrument for meeting the new administration’s energy goals as crude oil output growth becomes increasingly difficult,” the Standard Chartered analysts went on to state.
Rigzone has contacted the Trump transition team for comment on the SEB and Standard Chartered reports. At the time of writing, the Trump camp has not yet responded to Rigzone’s request.
A statement posted on Donald J. Trump’s Truth Social page on November 22 announced the nomination of Bessent to serve as the 79th Secretary of the Treasury of the United States.
“Scott is widely respected as one of the world’s foremost international investors and geopolitical and economic strategists,” the statement noted.
