U.S. Oil Producers Predict the Decline of the Shale Boom
Major oil companies are now openly discussing the end of the shale boom in the United States, attributing it to Donald Trump’s trade policy, which has led to a decline in commodity prices, according to the Financial Times.
Market participants told the publication that they are being forced to reduce drilling activity, which signals the winding down of a shale boom that has lasted for ten years. To break even, shale producers require oil prices of at least 65 US dollars per barrel. However, last week, oil prices in the U.S. averaged 61.53 US dollars per barrel, which is twenty-three percent lower than the peak levels at the start of the year.
S&P Global Commodity Insights forecasts that U.S. oil production will decline by 1.1 percent next year, falling to 13.3 million barrels per day. This would be the first production drop since 2015, excluding the pandemic-affected year of 2020. Former Pioneer Natural Resources shale executive Scott Sheffield believes that if prices fall to 50 US dollars per barrel, U.S. oil production could drop by 300,000 barrels per day.
Baker Hughes data confirms a significant reduction in the number of operational drilling rigs in the U.S.. Last week, the total stood at 553 rigs, which is ten fewer than the previous week and twenty-six fewer than a year ago.
The journal Oil and Capital (Neft i Kapital) notes that analysts had already predicted the end of the shale boom back in 2018–2019, and had forecast it specifically for 2025. However, this does not mean that the United States will abruptly cut oil production—it simply indicates that drilling in shale formations will become less active. The slowdown in new drilling may not be very noticeable, as new technologies allow companies to increase the recovery factor (RF) at existing wells. All of this suggests that the U.S. can maintain high production levels for some time.
However, this process is now being hindered by the Trump administration’s trade policy, which the former president counts among his achievements due to its role in lowering global oil prices. Under these conditions, American companies will find it unprofitable even to invest in increasing the recovery factor.
