Two large U.S. shale producers said they would cut capital expenditures on Monday from falling oil prices, prompting the industry to warn that U.S. production has peaked and may start to decline.
Diamondback Energy, one of the largest producers in the West Texas Permian Basin, the largest U.S. oil field in the United States, estimates that the number of fracturing crews in the U.S. has dropped by 15% this year unless prices change rapidly.
The company said it cut its 2025 capital budget by $400 million to $3.8 billion to $4.2 billion and abandoned three rigs. Rattlesnakes predict that by the end of June, the number of rigs operating in the U.S. will fall by 10% and further decline in the third quarter.
“U.S. onshore oil production is likely to have peaked due to these cuts in activity and will start to decline this quarter,” said Travis Stice, CEO of Diamondback.
Houston-based energy company Coterra Energy said it is trimming its capital expenditure in 2025 to $200 million to $2.3 billion, down from $2.1 billion to $2.4 billion, down from the Permian 10 yards in the second half of the year to seven units.
Oil prices fell more than $1 a barrel at a four-year low on Monday as traders reacted to OPEC+'s decision, announcing a second straight monthly output increase over the weekend. Brent Intrude, the international benchmark, is priced at $60.23 a barrel, while the West Texas Intermediate is closed at $57.13 a barrel.
The combination of increased OPEC supply and concerns that U.S. trade tariffs would hurt the global economy, that is, in April, Brent crude prices fell by nearly one-fifth, a month in nearly three and a half years.
At less than $60 a barrel, many U.S. shale producers will struggle to make money, especially in some of the country’s aging basins, forcing them to potentially stop drilling, put down drilling rigs and lay off employees. Analysts say the U.S. will lose market share at current prices.
"If the latest guidance from the two major U.S. operators will drop to 2026 for the rest of the year during the earnings season, shale production will drop - the door for OPEC+ to eventually regain market share," said Andrew Gillick, managing director of the energy research group Enverus.
Last year, U.S. President Donald Trump campaigned on a platform to unlock U.S. energy advantages, and he welcomed a drop in oil prices, which should help reduce inflation.
On Monday, he suggested that oil price slippage would help end the war in Ukraine by forcing Russia (which relies heavily on crude oil exports) to a deal.
"I think Russia's oil prices have fallen now, and I think we're in a settlement," Trump told the Oval Office reporter. "They want to solve it. Ukraine wants to solve it. If I weren't the president, no one would have settled."
Other reports from Myles McCormick