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Two big American shale producers said they would cut capital expenditure on Monday in response to sliding oil prices, prompting industry warnings that US production had peaked and could begin falling.
Diamondback Energy, one of the largest producers in the west Texas Permian basin, the largest US oilfield, said it estimated the number of US fracking crews had already fallen by 15 per cent this year and would continue to decline unless there was a rapid turnaround in prices.
The company said it was cutting its 2025 capital budget by $400mn to between $3.8bn and $4.2bn and dropping three drilling rigs. Diamondback forecast the number of drilling rigs operating in the US would fall by 10 per cent by the end June and decline further in the third quarter.
“As a result of these activity cuts, it is likely that US onshore oil production has peaked and will begin to decline this quarter,” said Travis Stice, Diamondback chief executive.
Coterra Energy, a Houston-based energy company, said it was trimming capital expenditures for 2025 to $2bn-$2.3bn, down from $2.1bn-$2.4bn, and dropping to seven rigs from 10 in the Permian in the second half of the year.
Oil prices fell by more than $1 a barrel to settle at four-year lows on Monday, as traders reacted to a decision by Opec+ to announce a second consecutive monthly output increase at the weekend. Brent crude, the international benchmark, settled at $60.23 a barrel, while West Texas Intermediate closed at $57.13 a barrel.
The combination of increased Opec supply and fears that US trade tariffs will hurt the global economy saw the price of Brent crude fall by nearly a fifth in April, the largest monthly drop in almost three and half years.
At less than $60 a barrel, many US shale producers will struggle to turn a profit, especially in some of the country’s ageing basins, forcing them to potentially stop drilling, lay down drilling rigs and cut jobs. Analysts said the US would lose market share to lower-cost Opec+ producers at current prices.
“If recent guidance from two major US operators holds through earnings season, shale production is set to decline through the rest of the year and into 2026 — opening the door for Opec+ to finally reclaim market share,” said Andrew Gillick, a managing director at energy research group Enverus.
US President Donald Trump, who campaigned last year on a platform of unleashing American energy dominance, has welcomed falling oil prices, which should help reduce inflation.
On Monday he suggested sliding oil prices would help bring an end to the war in Ukraine by forcing Russia — which is heavily reliant on crude exports — to strike a deal.
“I think Russia, with the price of oil right now, oil’s gone down, I think we’re in a good position to settle,” Trump told reporters in the Oval Office. “They want to settle. Ukraine wants to settle. If I weren’t president nobody would be settling.”
Additional reporting by Myles McCormick
https://www.ft.com/content/9e9192ba-02f1-4034-aaf0-200270d0f6d7
