(Oil Price) – The decline in oil prices and the prevailing uncertainty about the economy, trade, and supply chains are accelerating the peak in U.S. oil production despite President Donald Trump’s ‘drill, baby, drill’ slogan.
With the U.S. benchmark WTI crude prices at $60 per barrel, it’s mostly “hold, baby, hold” in the American shale patch, where output in the major basins except the Permian has already started to level off or drop.
The U.S.-China 90-day tariff pause and the start of trade talks did little to erase the crash in oil prices from April, and even less to restore confidence or wipe out the high uncertainty regarding the economy and the cost of supply with unknown levels of tariffs. The shale patch has historically been immediately responsive to changing market conditions, but living in 90-day cycles of tariffs, no-tariffs, reduced tariffs, or surprise U.S. geopolitical moves could be too much for the oil industry, especially the smaller companies.
The big ones, including ExxonMobil, Chevron, Occidental, and ConocoPhillips, aren’t voicing publicly concerns about doing business and doing it as usual at $60 oil. But some of them have already said that the peak in U.S. oil production is being accelerated and could be sooner than previously expected.
The peak, whenever it occurs, does not mean a steep decline afterwards—it would rather be a long plateau of leveling off of U.S. crude oil production in which the slowdown in shale would be partly offset by rising output from the U.S. Gulf of Mexico, executives and analysts say.
“As you know that most of the shale basins now have either plateaued or starting to decline, except for the Permian,” Vicki Hollub, President and CEO of Occidental Petroleum, said on the Q1 earnings call.
“If companies continue to talk about dropping activity levels, I think the Permian could plateau sooner than we expected – and we had expected the Permian to continue growth through 2027,” Hollub added.
Oxy had expected that U.S. production overall would peak between 2027 and 2030.
“It’s looking like with the current headwinds or at least volatility and uncertainty around pricing and the economy and recessions and all of that – it’s looking like that peak could come sooner,” Hollub said, adding that the Permian would grow very little this year, if at all.
Ryan Lance, the chief executive of ConocoPhillips, said on the company’s earnings call that at $60 oil, “the folks that don’t have the kind of cost of supply sitting in their portfolio are going to find themselves cash-strapped and returns-strapped.”
“Obviously, the balance sheets are in pretty good shape across the industry, better than we were in the last downturn, but you’ll see a lot of activity cut back,” Lance added.
At current prices, ConocoPhillips doesn’t expect a lot of things to change for the company, although there would be changes if WTI sinks to $50 per barrel. However, “that’s not our view today and doesn’t represent where we think the market is going to be for the next few years,” Lance noted.
The current mantra at ConocoPhillips is “don’t whipsaw this thing too hard right now…so don’t overreact, but don’t put your head in the sand either.”
Earlier this month, Diamondback Energy said onshore oil production in the U.S. has already peaked.
“We currently estimate that the U.S. frac crew count is already down ~15% this year, with the Permian Basin crew count down ~20% from its January peak, and both are expected to decline further,” Diamondback said in a letter to investors.
Liberty Energy, the fracking company founded by now-Energy Secretary Chris Wright, is also prepping for a slowdown in shale drilling.
U.S. crude oil supply will rise more slowly than expected for the rest of 2025 and in 2026 and peak as early as this year, as WTI prices at $60 per barrel are testing the breakeven point of shale production, energy flows intelligence firm Kpler said last week.
With the low oil prices, Kpler has now cut its U.S. crude supply forecast by 120,000 barrels per day (bpd) to 170,000 bpd for the rest of 2025 and into 2026, “as weaker prices threaten to slow shale production.”
Despite steady near-term activity, growth is slowing in the U.S. shale patch, and U.S. crude output is set to peak this year, Kpler noted.
By Tsvetana Paraskova for Oilprice.com
