The oil and gas industry is facing challenges as two major American shale producers announced cuts in capital expenditure in response to plummeting oil prices. Diamondback Energy, a key player in the west Texas Permian basin, revealed that the number of fracking crews in the US had declined by 15% this year and is expected to continue dropping unless prices rebound. The company is slashing its 2025 capital budget by $400 million and reducing drilling rigs, signaling a potential decline in US onshore oil production.
Coterra Energy, based in Houston, is also scaling back capital expenditures and reducing rigs in the Permian basin. The recent decision by OPEC+ to increase output has further contributed to the downward pressure on oil prices, with Brent crude settling at $60.23 a barrel and West Texas Intermediate closing at $57.13 a barrel. This, coupled with concerns over global economic impacts of US trade tariffs, has led to a nearly 20% drop in Brent crude prices in April.
With oil prices below $60 a barrel, many US shale producers are facing profitability challenges, especially in aging basins. This may result in drilling halts, rig layoffs, and job cuts. Analysts predict that OPEC+ producers could gain market share at the expense of higher-cost US shale producers at current price levels.
US President Donald Trump, known for his focus on American energy independence, has expressed optimism about falling oil prices potentially aiding in resolving conflicts, such as the war in Ukraine. Trump believes that the economic pressure on Russia, a major oil exporter, could push them towards a settlement.
The industry outlook suggests a potential decline in US shale production for the rest of the year and into 2026, paving the way for OPEC+ to reclaim market share. These developments highlight the volatile nature of the oil and gas sector and the impact of global economic factors on industry dynamics.
Additional reporting by Myles McCormick
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