"Drill, baby, drill." That was one of Donald Trump's campaign slogans. Behind those three words was the stated goal of increasing domestic production by three million barrels per day. The challenge? To increase supply in order to lower prices at the pump for Americans and, in turn, contain inflation.

But barely five months after Donald Trump's return to the White House, the US Department of Energy has revised down its oil production forecasts for 2026. According to this new estimate, the United States is expected to produce 13.37 million barrels per day next year, 50,000 fewer than in 2025.

This would be the first decline in US crude production since 2021, when oil companies cut back in response to the drop in demand caused by the Covid pandemic.

This forecast is the result of a relatively low price environment, which is prompting producers to reduce their investments. The Dallas Fed estimates that the price per barrel needed to launch new drilling is $65. However, the price of WTI has been below this level for two months now.

Since the beginning of the year, the price of oil has fallen by 9%, against a backdrop of US tariffs that are raising fears of a slowdown in demand.

OPEC+ opens the floodgates

This drop in prices can also be explained by OPEC+'s strategy of continuing to put supply back on the market. In April, May, and June, the cartel's countries increased their production by 411,000 barrels per day each time. This decision was officially justified by "healthy market fundamentals."

Saudi Arabia is calling the shots. The kingdom, which had shouldered most of the production cuts decided at the end of 2022, is now refusing to take on the role of "swing producer" (additional producer) alone. This is therefore primarily a form of punishment for countries that do not comply with quotas, such as Kazakhstan and Iraq. The idea is to restore a form of discipline within the cartel.

Secondly, this move could be Riyadh's response to Donald Trump. In January, the US president called on OPEC countries to lower oil prices. The idea is the same: lower oil prices lead to lower inflation, which in turn allows interest rates to be lowered.

Finally, there is also a logic of price war, since a prolonged period of low prices would affect production in countries where costs are higher (such as the United States). In this way, OPEC+ could eventually regain market share.

Priority to cash flow

Prices are therefore likely to remain under pressure in the coming months. In the US, the first signs of a slowdown in production are already apparent. The number of active drilling rigs has fallen for the sixth week in a row, according to data from Baker Hughes. Over one year, the decline has reached 10%.

Industry leaders are fairly pessimistic. Last month, in his letter to shareholders, Travis Stice, CEO of DiamondBlack, even spoke of a "tipping point" for US oil production.

The United States has regained its position as the world's largest producer thanks to the development of shale since the early 2010s. In 2024, 13.5 million barrels per day were extracted, compared with 5 million in 2010.

But current prices are threatening this momentum: "On an inflation-adjusted basis, there have only been two quarters since 2004 when oil prices have been as cheap as they are today (with the exception of 2020, which was impacted by the pandemic)," Travis Stice points out.

However, for several years now, US producers have been focused on generating free cash flow rather than on production growth. "In short, we prefer to use the extra dollars generated to buy back shares and reduce debt rather than drill and complete wells at current prices," the DiamondBlack boss concludes.