Trump embraces lower oil prices amid Saudi output surge, despite risks to US energy industry

Trump embraces lower oil prices amid Saudi output surge

US President Donald Trump’s promise of “American energy dominance” is being tested by a flood of cheap crude oil from Saudi Arabia and OPEC, which threatens to derail the US oil industry just as he promotes falling fuel prices as a political win, Politico reported.

According to sources familiar with Trump’s ongoing Middle East visit, Saudi leaders are moving forward with plans to boost oil output by nearly a million barrels a day beginning in June—contributing to the steep drop in global oil prices this year. Though the move has battered US oil companies and forced production cuts, Trump has shown no sign of pushing back.

A quiet deal with loud consequences

While Trump has publicly celebrated the decline in gasoline prices—falsely claiming earlier this month that they fell to $1.98 per gallon—he has not criticised OPEC’s supply hike, even as it directly undermines domestic oil production. Behind closed doors, the president and his aides are reportedly focusing their Middle East agenda on security partnerships, Iran diplomacy, and investment opportunities—not oil diplomacy.

“It’s a great gesture from Saudi Arabia,” one official said, describing the tone of energy-related discussions as cordial and secondary. Analysts interpret Trump’s silence as a clear signal: when forced to choose between high oil output and low prices, he picks the latter.

The fallout for US energy producers

US oil executives have long feared this moment. The industry, which powered America to a record 13.4 million barrels per day in 2024, is now facing its first production decline since the pandemic as oil prices hover near $60 per barrel. Companies like EOG Resources and Diamondback Energy are slashing investment and warning that as many as 10 percent of US drilling rigs may be idled due to falling profitability.

“The industry is at a tipping point,” said Diamondback CEO Travis Stice. “We believe US oil production has peaked and will begin to decline this quarter.”

The industry’s shift comes despite contributing an estimated $75 million to Trump’s campaign, hoping he would back policies that support growth. Instead, Trump's trade tariffs and now the Saudi-led glut have injected deep uncertainty into markets.

A contradictory energy agenda

Trump’s broader energy platform has long included contradictory goals: expand US oil output while keeping consumer prices low. The OPEC surge helps him fulfil the latter, even if it damages the former. The benchmark US oil price has fallen from $80 a year ago to $61 now, with some projections suggesting further declines could come if demand slows or global economic uncertainty persists.

Meanwhile, Trump’s exaggeration of falling gasoline prices—widely debunked by industry trackers—suggests a political focus on short-term voter relief rather than long-term energy strategy.

A long-term threat to US energy leadership

Analysts warn that if prices stay suppressed and US producers keep scaling back, America could lose the energy independence it gained during the shale boom. Paul Sankey of Sankey Research noted that while Trump may celebrate low prices as a policy win, the real cost could be the dismantling of one of the nation’s most successful industries of the past two decades.

“One of the great American success stories was becoming the world’s top oil and gas producer,” Sankey said. “Making that go away to win headlines about cheap gas could backfire.”