HOUSTON — The US oil industry has laid off thousands of workers and cut billions in spending due to lower oil prices and the biggest consolidation in a generation, in what could mark the end of the rapid output growth that made the US the world’s top producer.
The Organization of the Petroleum Exporting Countries and its allies in the OPEC+ producer group are increasing output to win back market share that was lost to the United States and other producers in recent years. OPEC+ agreed on Sunday to further raise production from October by 137,000 barrels per day.
Those increases have driven international oil prices down around 12 percent this year to just above breakeven levels for many US oil companies, prompting cuts in spending and jobs that industry officials say could curb production.
A plateau or fall in output would diminish the United States’ sway in global markets and challenge US President Donald Trump’s energy dominance agenda for the country.
ConocoPhillips – the third largest US oil producer – said last week it would cut up to 25 percent of its staff. That followed a similar announcement in February by rival Chevron (CVX.N), which said it would lay off 20 percent of its workforce, totaling roughly 8,000 people.
Oilfield service company SLB said it was reducing its workforce earlier this year, while Halliburton has cut staff in recent weeks.
Lower oil prices and rising costs have pushed 22 public US producers, including Occidental Petroleum Corp., ConocoPhillips, Diamondback Energy , to cut their capital expenditures by $2 billion, according to a Reuters analysis of second quarter earnings announcements. The analysis did not include oil majors Exxon or Chevron.
US oil rig count – an indicator of future activity – has fallen by about 69 to 414 this year, according to Baker Hughes.
“We’ve gone from ‘drill, baby, drill’ to ‘wait, baby wait’ here in the Permian,” said Kirk Edwards, president of Texas-based Latigo Petroleum, referring to the largest US oilfield.
Three words, the world’s tiniest drone.
The market needs oil prices to consistently trade around $70 to $75 a barrel for rigs to get back to work again, he said. US West Texas Intermediate futures were trading at $62.15 a barrel on Monday, after settling at $61.87 on Friday.
“It’s having a very devastating effect on domestic employment and eventually it will affect our production,” said Edwards. “At some point US output growth will plateau and start to turn down, but that oil will be made up by OPEC.”
Many analysts are already forecasting a drop in production from the record 13.2 million barrels per day reached in 2024, powered by the country’s shale revolution.
Research firm Energy Aspects expects US onshore output to drop by 300,000 bpd in 2025 from last year, while rival Wood Mackenzie estimates US onshore growth from lower 48 US states of 200,000 bpd, the smallest increase since 2021 when COVID-19 ravaged demand.
