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Executives say trade war and Opec output surge create toughest challenge since the Covid-19 pandemic

https://www.ft.com/content/cd7c043a-1983-4106-b4f9-13d66f951faf

US shale oil producers are facing their gravest threat in years, as a sudden crude price sell-off triggered by Donald Trump’s trade war has pushed parts of the sector to the brink of failure, executives have warned.

US oil prices have fallen 12 per cent since Trump’s “liberation day” tariff announcement last week, leaving them below the level many producers in Texas say they need to break even — and sparking fears the industry could be forced to idle rigs.

Opec’s recent decision to raise production has also raised alarm bells.

“This reminds me exactly of Covid,” said Kirk Edwards, president of Latigo Petroleum, an independent producer based in Odessa, Texas, referring to the 2020 price crash that brought a wave of bankruptcies across the shale sector.

Then too, oil markets were facing the twin threats of falling demand and new supplies from Opec producers such as Saudi Arabia, which last week announced a plan to increase supplies faster than expected in the coming months.

“We are facing a double whammy again,” said Edwards, adding that if prices did not recover in the next couple of months, there could be “devastating events” in the Permian Basin — the world’s most prolific oilfield and the engine room of the US industry.

Bill Smead, chief investment officer at Smead Capital Management, which owns shares in several shale producers, said the tariff war had created a “bloody mess” that risked scaring investors away from oil and gas businesses.

“Trump wants to get the oil price down to $50 and you will end up with half the number of companies in the industry if that happens,” he said. “It would result in M&A with the strong picking up the pieces of the weaker players.”

Analysts said Trump’s decision to leave tariffs on China — the world’s biggest oil importer — would continue to loom over global crude demand prospects.

Bill Farren-Price at the Oxford Institute for Energy Studies said: “There were quite a lot of pretty steady expectations for oil demand growth this year. I think they are all now in the bin.”

At less than $60 a barrel, many US oil 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 let employees go.

Rystad Energy said many US shale producers faced break-even costs of $62 a barrel of WTI when debt servicing and dividend payments were included.

S&P Global Commodity Insights said this week that $50 oil could cause production to decline by more than 1mn b/d — a far cry from the Trump administration’s goal of fast output growth to drive down US petrol prices.

Many American oil executives backed Trump in last year’s election but are reeling from the price turn since he entered office. Some e

Nothing but an eventual lottery ticket Bentley is, olivergill. For an eventual development of Bentley ENQ will need 1)way higher oil prices and especially 2) A way more supportive UK government energy and fiscal policy.

Https://www.bloomberg.com/news/articles/2025-04-09/texas-wildcatters-grow-impatient-with-trump-as-oil-prices-tank?srnd=homepage-europe

The market rout sparked by President Donald Trump’s trade war is touching almost every part of the economy. But there are probably few industries feeling more aggrieved right now than US shale oil....Half of the 20 worst-performing stocks on the S&P 500 Index since Trump announced his tariffs April 2 are in the oil, gas and petrochemical sector, while crude prices have plunged to a four-year low.

"I don’t know an industry that was more supportive of Trump than the oil and gas industry,” said Kirk Edwards, a former chairman of the petroleum association who attended the tournament Monday in the West Texas city of Odessa, which lies in the middle of the Permian amid a landscape dotted with pumpjacks. “People are in shock at how quickly he can get the price of oil down.”....

The president has long made it clear where he stands on oil prices.

On the campaign trail last fall, Trump said he didn’t “give a damn” if oil companies drilled themselves out of business as long as prices fell. Now, as oil executives watch plunging prices with alarm, Trump is gleefully celebrating the fact. Gasoline, he predicts, could fall to the lowest level in years......

Several senior oil executives, who asked not to be identified criticizing the president as the trade fight plays out, expressed frustration with Trump for continually talking down the price of their key commodity.

Even before Trump announced the tariffs and helped triggered the price collapse, oil executives were privately grumbling about his trade policy. In the March 26 survey by the Federal Reserve Bank of Dallas, shale executives submitted a raft of blistering anonymous comments criticizing the president’s tariff agenda, with one calling it “a disaster for the commodity markets.”

Even if prices bounce back to $65, shale operators probably would shut down 25 drilling rigs and hold US oil production flat, Citigroup Inc. analysts warned last month.

The drop would be particularly damaging because output from shale wells declines much faster than conventional wells in the Gulf of Mexico or elsewhere, falling 60% or more during the first year they come online. That means drillers need to tap new wells just to keep production steady.

“You will see the Permian Basin roll over” at $50 a barrel, Sheffield said. “Once that starts rolling over, it will be impossible to get it back to increasing its production above the treadmill.”

With their easy-to-drill wells, the Permian and other shale basins have made the US a swing producer in the global oil market, able to quickly bring fresh supply online when demand surges. A significant drop in production, however, could endanger that.

Less drilling activity means jobs losses, idled rigs and a potential erosion of production capacity if oil prices were to bounce back, as happened after Covid-19.

Has anyone ever seen any president or a head of state behaving like Trump last night?

"I 'm telling you, these countries are calling us up, kissing my a***. They 're dying to make it here. Please, please, sir, make a deal. I 'll do anything, I 'll do anything, sir."

Perhaps Idi Amin ages ago, Khaddafi? But a President of a Western nation? Baffled i am.

Https://www.energyvoice.com/insights/energy-opinion/568942/gb-energy-and-the-china-slavery-question/

When or if Mexico's president Claudia Sheinbaum, who is a former climate scientist, is able to change her viewpoint on the importance of being energy independent and on fracking, why is Starmer not even inclined to discharge the horrible Ed Miliband? Why can Ed keep going with his green blitz and spend like an army of drunken sailors while the UK's finances are incredibly tight and debts becoming unsustainable? Floating windmills in the Celtic Sea, new gigantic turbines in the English Channel, the 22 Bn. £ carbon capture-adventure....Electricity from wind today at this very moment 2,2%. https://grid.iamkate.com/

So much for making Britain energy independent.

Mexico considers increasing fracking as Donald Trump sparks fear over US gas reliance

Claudia Sheinbaum, a former climate scientist, explores shale to ease dependence on unpredictable American president

https://www.ft.com/content/919e54fe-bed3-462a-b54b-9a935b95aba7

Mexico’s government is talking to the private sector about expanding fracking as Donald Trump’s trade threats heighten fears over the country’s dependence on US gas, four executives with knowledge of the conversations have said.

Mexico relies on its northern neighbour for 70 per cent of its gas supply, meaning an unpredictable US president could plunge parts of the country into darkness within days. The move towards fracking, long a taboo in President Claudia Sheinbaum’s leftwing ruling party, joins a global trend of countries aiming to cut their exposure to American trade.

Sheinbaum, a former climate scientist, directed officials to explore fracking to help deliver energy independence, the executives said, while government officials had asked companies for their views on developing Mexican shale gas.

(continued)

It seems perverse to encourage the import of greater levels of oil and gas with a higher carbon footprint at the expense of our own cleaner resources.

It is similarly perverse to encourage the collapse of the energy supply chain, which currently depends on revenue from oil and gas.

Destroying the income stream of supply chain companies ahead of the scale-up of offshore wind generation risks destroying the homegrown energy transition.

We already have a problem with storing and distributing the valuable electricity generated from offshore and onshore turbines.

The domestic offshore energy industry is currently at a crossroads where homegrown energy and the sustainable energy transition are at risk.

We are awaiting the conclusions of consultations on oil and gas licensing, its fiscal framework, the environmental impact of downstream emissions, and a wider consultation on the future of the North Sea itself.

Without fresh investment into ongoing production, the UK will be reliant on imports for as much as 80% of its needs by 2030 which will not bring a corresponding value to the economy.

Https://www.energyvoice.com/oilandgas/568982/tackling-the-uk-energy-import-gap/

We are confronting a level of global geopolitical uncertainty not seen in most of our lifetimes.

We must make better use of our own North Sea energy assets instead of relying increasingly on foreign imports.

Official statistics show that the UK’s total energy production hit a record low in the third quarter of 2024. More than 40% of total UK energy demand is being supplied from abroad

Yet analysis by Offshore Energies UK using authoritative official sources, shows we can produce 40%-60% more oil and gas from the North Sea than official forecasts suggest.

The independent Climate Change Committee says the UK will need 13bn –15bn boe between now and when we reach our net zero emissions target in 2050. According to the North Sea Transition Authority, we will produce around four billion boe.

OEUK has used the same authoritative sources to demonstrate that two to three billion more barrels can be produced from the North Sea.

That same report shows the offshore energy industry supports 200,000 jobs across the United Kingdom and generates around £20 billion a year in revenue.

It points out that imported liquid natural gas (LNG) has a methane profile up to four times higher than North Sea gas.

The import gap between what we produce ourselves and what we need to ship and pipe from abroad is particularly concerning in an increasingly volatile world. We need homegrown energy.

Many energy industry specialists believe we should be able to end use of imported LNG altogether, but meeting even half of the country’s projected demand for oil and gas on our journey towards net zero would add more than £200 billion of value to the UK economy, support highly skilled jobs across the country and meet UK climate goals.

Britain has suffered an “almost unprecedented” plunge in productivity over the past five years in a fresh setback for the Chancellor’s growth ambitions.

The Resolution Foundation said GDP per head slumped by 0.5pc between 2019 and 2024, marking the worst drop since the 1970s outside of the financial crisis.

It means UK workers are even less productive than official data suggest.

Simon Pittaway, from the Resolution Foundation, said: “Britain’s already dire productivity record in the 2010s has got even worse during the turbulent 2020s.

“The recent slump is the worst since the financial crisis and explains why living standards are struggling to grow.”

Only debt-bloated Italy has a worse track record of productivity since 2010 than the UK among G7 countries.

The widening gap between the UK and the US can partly be blamed on Britain’s declining reserves of oil and gas in the North Sea, which have fallen for two decades.

The think tank noted that extraction has plunged from pre-pandemic levels, even as the industry’s workers still do roughly the same hours as in 2019.

In contrast, US workers are doing slightly fewer hours, while oil and gas extraction has boomed.

This alone explains 16pc of the productivity gap with the US.

Https://www.telegraph.co.uk/politics/2025/04/07/trump-tariff-war-oil-gas-north-sea-europe-usa/

.......

Why wouldn’t we use what we have instead of buying what the USA is selling? We are currently importing £8.5 billion worth of its crude oil when survey after survey insists that developing existing known North Sea reserves would produce enough oil and gas to meet half of the UK’s needs for years to come.

And furthermore, as the Prime Minister and his Chancellor ponder the great gaping hole in the UK economy, thanks to their friend in the White House, industry sources insist that developing new fields could produce a £150 billion boost to the UK economy.

Trump’s tariff war has only just happened but if we want to avoid its damaging effects, it’s time all our politicians got off the fence and showed that we can look after ourselves, thank you very much.

And that means making the best use of our own resources, like North Sea oil and gas, instead of buying from The Donald.

Hi Romaron, for foreigners who want to see the interview you mentioned (the i-player -version you posted is only accessible in UK) : https://www.youtube.com/watch?v=1kGigvZ-Sa8

Mr Miliband said: “The UK is a world leader when it comes to floating offshore wind, and by unlocking the untapped potential of the Celtic Sea, we will reap the benefits of economic growth and thousands of jobs in Wales and the South West.

“More floating turbines in our waters means more clean, home-grown power that we control, delivering energy security for families and businesses.”

Energy security whilst today wind 5,2%.....https://grid.iamkate.com/

King Charles won't complain about Ed's plans though : The Crown Estate is the King’s property group, managing the seabed and much of the coastline around England, Wales and Northern Ireland. The estate in recent years has landed huge profits from renting out Britain’s seabed to offshore wind farms.

t has since unveiled plans to lease seabed space for up to 30 gigawatts of offshore wind by 2030, which will require thousands of new turbines.

The estate also owns some 200,000 acres of prime farmland, some of which it also intends to make available for renewable energy projects.

Https://www.telegraph.co.uk/business/2025/04/07/giant-floating-wind-farms-to-be-moored-off-south-west-coast/

Giant floating wind farms are set to be moored off Britain’s south-west coast as Ed Miliband ramps up his green energy blitz.

Under proposals being drawn up by the Crown Estate and the Energy Department, large parts of the UK’s seabed are to be rented out to offshore wind companies building 300m turbines as tall as London’s Shard skyscraper.

A tender for three sites in the Celtic Sea has now been launched to host the wind farms, which are to be mounted on individual floating platforms as big as a football pitch.

The plans form part of Mr Miliband’s net zero drive, as he attempts to unleash wind and solar farms across swathes of Britain’s land and sea.

Just last week, the Energy Secretary also approved a separate proposal for new turbines in the English Channel despite hundreds of complaints from local households.

......

Https://www.reuters.com/business/energy/seeking-punish-cheaters-saudi-arabia-pushes-opec-open-oil-taps-2025-04-04/

Saudi Arabia's anger at Kazakhstan and other over producing nations was the key driver behind a shock decision by the OPEC+ oil group to open taps on Thursday and might not be reversed even if oil prices fall further, three OPEC+ sources told Reuters.

Saudi Arabia has been an aggressive supporter of production control to balance the market in the last five years as its budget requires oil prices of around $90 per barrel. Thursday's decision represents a major departure from those policies.

For the past several months, Saudi Arabia has been pushing Kazakhstan and Iraq to improve compliance with production cuts, threatening to otherwise start ramping up its oil output.

OPEC+ might take no action to reverse steep output hikes even if oil prices drop below $60 per barrel, one of the three OPEC+ sources familiar with Thursday's discussions said. He asked not to be named due to sensitivity of discussions.

A second source familiar with the deliberations on Thursday said the message from Saudi Energy Minister Prince Abdulaziz bin Salman was that members needed to stick to their targets or more production increases would follow.

"OPEC is becoming as unpredictable as Trump," a third OPEC source said.

.....

https://www.reuters.com/business/energy/saudi-arabia-cuts-oil-prices-asia-four-month-low-2025-04-06/

Saudi Arabia, the world's top oil exporter, on Sunday lowered crude oil prices for Asian buyers in May to their lowest in four months, after a shock decision by the OPEC+ oil group to increase supply on Thursday.

Miliband approves wind turbines as tall as Eiffel Tower to be built in Channel

Ed Miliband approves a £4bn development off the Sussex coast despite hundreds of objections

https://www.telegraph.co.uk/business/2025/04/05/miliband-plans-wind-turbines-tall-as-eiffel-tower-channel/

Mr Miliband said: “This project puts us within reach of our clean power offshore wind target. It’s time to get off the fossil fuel rollercoaster, roll out clean power, protect our energy security and bring down bills for good.

“The UK has a boundless supply of wind that cannot be turned on and off at the whims of dictators and petrostates.”

......

Mr Miliband’s decision to approve Rampion 2 follows a string of controversial planning grants including the giant Sunnica solar park in Suffolk.

In each case, hundreds of objections from local people, councils and environmental groups were overruled by Mr Miliband on the grounds that generating low carbon power was more important than the landscape and other impacts.

The Rampion project is led by RWE on behalf of joint venture partners, all of which are foreign-owned.

The UK’s contract for difference scheme means that, if accepted into it, Rampion will be guaranteed profits – which will mostly flow abroad to the scheme’s overseas investors.

The turbines will stand 1,066ft above sea level, the same height as the Parisian landmark (Eiffel Tower).

Under the sea they will be embedded in foundations comprising thousands of tons of cement and protected from currents by thousands more tons of “rock armour” – boulders typically quarried from Norwegian fjords and dumped around the towers. Fishermen fear the scheme will destroy their livelihoods by making swathes of seabed inaccessible.

Labour must rip up its net zero plans in this new world order

Now more than ever, Britain needs a strategy for growth that stands a chance of working

https://www.telegraph.co.uk/business/2025/04/05/new-world-order-labour-must-rip-up-plans-starting-net-zero/

Labour’s plan for the economy when it won the election by a landslide last year involved investment in green energy. This would create hundreds of thousands of well-paid jobs, unlock billions tied up in pension funds for investment and forge public partnerships with business to boost key industries.

Looking back, it feels like ministers were talking about a different world. In the wake of Donald Trump’s assault on the open trading system, it is no longer of any relevance.

The UK faces an economic emergency. In a world dominated by tariffs and trade wars, the Government needs to rip apart its plans and start afresh with proposals that can genuinely boost growth – and that needs to start with scrapping the wealth-destroying net zero targets.......

.........

First, and most importantly, we need to ditch the absurd net zero targets that are crushing British industry.

We have already made huge cuts in our carbon emissions, and anyway we account for less than 1pc of the global total. We have more than played our part.

Our attempt to “lead the world” has come at huge cost: destroying a North Sea oil industry that still has plenty of useful life in it; prevented us from fracking, even though shale oil and gas has proved completely safe in Canada and the US; and, worst of all, landed us with industrial energy costs twice as high as in America, and 50pc more than in France, wiping out industries such as chemicals, steel and building materials.

We can adjust our climate targets, while still reducing emissions in line with – but not ahead of – the rest of the world. It is probably the single most important move we can make to revive our economy......

......

We must hope Trump makes a U-turn soon. From FT :

"The speed and scale of the American public’s souring on Trump’s economic agenda is stunning. This week, just before the tariff chaos, 63 per cent of Americans had a negative view of the government’s economic policy, comfortably the highest figure since records began almost 50 years ago.

All-time records were also shattered for the share of people who expect the economy to further deteriorate over the next year. Just 25 per cent of US adults said they expect their finances to look better in five years than today — lower even than at the nadir of the Great Recession. Notably, these sharp deteriorations are being felt across the aisle. Even before “liberation day”, a third of Republicans disapproved of Trump’s actions on the economy, a remarkable feat given levels of partisan polarisation in America."

"The economic disconnect between Trump’s Maga on the one hand and the wider conservative Republican party on the other is clear in polling data shared with me by YouGov. This shows that the narrow subset of voters who identify as Maga Republicans continue to approve of the president at astronomically high levels, even after the tangible turmoil of the past 10 weeks. But the larger group of other voters who backed Trump last November is rapidly souring on his economic policies and overall record. "

"Trump, his vice-president JD Vance, Elon Musk and the other senior figures around him operate largely in their own closed media ecosystem, populated by vocal members of the deeply ideological Maga community. As such they tend to be detached from both wider public opinion and dissenting voices.

This may give the president and his team the sense that their actions have been much better received than they have. But the data suggests that while the Maga echo chamber may be impervious, it is far from all-pervasive. According to the University of Michigan’s consumer sentiment survey, the share of Republicans who have encountered critical news stories about Trump and his policies has climbed sharply in recent weeks. Evidently, distracting Americans from the realities of the stock market is a task too far for the podcast bros."

"There are two clear lessons from Trump’s second term thus far. The first is that he’s not ushering in a new era of American prosperity. The second is that as more people realise this, the political situation could start to change quite quickly."

@BTFATH1 : As you mention the golf course, i can't resist to mention this comment i read on Seeking Alpha today :

"What was really most painful and a punch to the gut was to see POTUS take off for yet another round of golf even as our livelihood, our savings, our future suffer through this deep carnage. No single leader of this country has ever all by himself, without assistance or cause from another, caused such awful damage to his people. Actually, that's not accurate. He has received plenty of help and sanction from others. Some of those have returned to their weekend of high living on their private jets, in their mansions, yachts, holiday homes etc. Many of them have returned to their red caps embroidered with four words that ironically mock the ruin our country falls into. 220 of his enablers that fill a house did not even wait for the week to end. Those who would cut social security, medicare, medicaid because the recipients are just not productive, did not even wait for the weekend. They just abandoned work and left for home even as the week started. "

Hi AIOK, WTI dropping to low 60's following a one-two punch of sweeping U.S. import tariffs and an unexpected OPEC+ supply hike will be hurting most shalers too : https://oilprice.com/Latest-Energy-News/World-News/Todays-Oil-Prices-Arent-Survivable-For-US-Producers.html

It doesn't look like we 'll see windfall profits soon.