President Donald Trump's pledge to lower oil prices and stimulate fossil fuel production during his second term is likely to encounter significant obstacles, primarily due to the reluctance of America's top oil producers to scale up production in the current market environment.

The US oil industry has experienced a boom in recent years, pushing crude production to historic levels. According to the US Energy Information Administration, the country produced an average of 13.4 million barrels of oil per day in 2024, setting a new record for the third consecutive year. However, this surge in production, coupled with slight declines in oil prices, has left energy giants hesitant to further increase oil supply to the market.

Major oil companies like ExxonMobil and Chevron have expressed caution about the industry's outlook for the coming year. ExxonMobil CEO Darren Woods stated that as crude prices decline, industry revenues and profits are expected to follow suit. Chevron, despite reaching new production records in 2024, saw a 17% decline in annual profit compared to the previous year.

The sentiment among oil producers is reflected in a Dallas Fed survey, which found that 43% of oil and gas executives planned to decrease or maintain their capital expenditures at current levels in 2025. Additionally, 71% of executives reported that oil production had remained stable or decreased over the fourth quarter compared to the previous quarter.

Analysts generally anticipate oil prices to remain stable over the next year. Goldman Sachs projects Brent crude prices to average around $78 a barrel in 2025, suggesting minimal upside from current levels.

The reluctance of oil companies to significantly increase production is attributed to several factors, including the delicate supply and demand balance in the global oil market, higher interest rates affecting borrowing costs, and rising decline rates in many US shale fields. These factors collectively pose challenges to Trump's ambitious plans for the oil sector.

For energy traders and analysts, this situation underscores the complex dynamics at play in the oil market. While political rhetoric may favor increased production, market realities and industry priorities are likely to be the primary drivers of supply decisions. The potential gap between policy ambitions and industry action could lead to interesting market dynamics and possibly create opportunities for savvy traders in the coming year.