(Reuters) — The U.S. oil industry is facing significant challenges, having laid off thousands of workers and reduced billions in spending due to declining oil prices and major industry consolidation. This shift may signal the end of the rapid output growth that once positioned the U.S. as the top global producer.
In response, the Organization of the Petroleum Exporting Countries and its partners in the OPEC+ group are ramping up production to reclaim market share lost to the U.S. and other producers. On Sunday, OPEC+ announced plans to increase output by 137,000 barrels per day starting in October.
These adjustments have led to a nearly 12% decline in international oil prices this year, bringing them close to breakeven for many U.S. companies. This situation has prompted significant budget cuts and layoffs, which industry insiders warn could limit future production. Should output plateau or decline, it could weaken the U.S.’s influence in global oil markets and complicate President Donald Trump’s energy dominance agenda.
ConocoPhillips, the third largest oil producer in the U.S., recently announced it would reduce its workforce by up to 25%. This follows a similar announcement from Chevron, which plans to lay off 20% of its employees, approximately 8,000 workers. Other companies like SLB and Halliburton have also implemented workforce reductions.
A Reuters analysis indicated that 22 public U.S. oil producers—such as Occidental Petroleum, ConocoPhillips, and Diamondback Energy—have cut capital expenditures by $2 billion, although major players like Exxon and Chevron weren’t included in this assessment.
Compounding these issues, the U.S. oil rig count—a key indicator of future drilling activity—has dropped by about 69 to a total of 414 this year, according to Baker Hughes. Experts suggest that oil prices need to stabilize between $70 and $75 per barrel for drilling operations to resume effectively. Current trading for U.S. West Texas Intermediate futures was at $62.15 per barrel on Monday.
As of the last week of August, production from the lower 48 states of the U.S. was approximately 13.4 million barrels per day, slightly below the peak of 13.6 million reached in December of the previous year.
