BY ARATHY SOMASEKHAR
HOUSTON – President Donald Trump moved on his first day in office to increase US oil and gas production, but the country’s oil industry is actually starting to think about cutting output and jobs due to a double whammy of higher crude output from OPEC and on-again, off-again tariffs that have dented demand.
The US is the world’s largest oil producer, pumping some 13.55 million barrels per day, employing millions of workers and generating trillions of dollars annually. Trump campaigned on the motto of “drill baby drill,” and the national energy emergency he declared on his first day of office was designed to make it easier for companies to increase production, while he instructed officials to do everything they could to bolster the industry.
Instead, the market has been rattled by a steep slump in US crude futures to near $55 a barrel this month from about $78 the day before Trump was sworn in. Many companies say they cannot drill profitably if oil prices fall under $65 a barrel.
New tariffs will make it more expensive to buy steel and equipment, industry watchers said, which could further discourage drilling unless oil prices rise substantially.
Oil markets, along with Wall Street, began a free fall on April 2 when Trump announced the new tariffs on trading partners. Shortly after, the Organization of the Petroleum Exporting Countries and its allies in OPEC+ said they would accelerate output hikes, pushing US oil prices to their lowest levels since pandemic lockdowns crushed demand.
The US Energy Information Administration sharply cut its estimate of US crude prices to $63.88 per barrel for 2025 from a prior forecast of $70.68 a barrel, citing global trade policy and higher OPEC production. Global oil consumption for 2025 will increase by 0.9 million barrels per day (bpd), 0.4 million bpd less than EIA’s prior forecast, the EIA said this week.
Even before the tariff-driven price fall this month, top companies including Chevron and SLB had announced layoffs to cut costs.
“If prices get sub-$60 and stay there, we’ll see a definite drop in the rig count,” said Roe Patterson, managing partner of Marauder Capital, a private equity firm investing in US oilfield services sector.
