According to Zhitong Finance APP, world leaders in the Energy Industry will participate in the Cambridge Energy Week (CERAWeek) conference in Houston this week. The sharp drop in oil prices has forced large oil companies to cut thousands of jobs, despite the support of the fossil fuel-friendly US government encouraging them to increase production. Since President Trump's inauguration 47 days ago, rapid reforms have been made to the government and policies, including large-scale layoffs, overturning many policies of the previous administration.

The reset of the Energy Industry will be the focus of the Cambridge Energy Week (CERAWeek) conference, which will have more than 8,000 representatives in attendance. Among the attendees and speakers are US Energy Secretary Chris Wright, energy ministers from OPEC+ member countries Nigeria, Libya, and Kazakhstan, as well as the CEOs of Saudi Aramco, Chevron (CVX.US), Shell (SEL.US), BP PLC (BP.US), and Total (TTE.US).

Trump has repeatedly urged the Oil & Gas Industry to "drill, drill, drill," and ordered government agencies to cut red tape to maximize US oil and gas production - before he took office, US oil and gas production had already reached record levels. He ended the moratorium on approving new natural gas export projects and overturned the ban on drilling in federal waters.

However, Trump's trade and foreign policies may increase the costs for US refineries importing millions of barrels of oil from Canada and Mexico. If the US relaxes sanctions on Russian Energy in the event of ending the Russia-Ukraine war, his rapid pivot on Russian foreign policy could disrupt Global oil flows and reduce US oil and gas in the European market. Additionally, Trump terminated the licenses allowing Venezuela to export oil to the US and threatened to reduce Iran's oil exports to zero, all of which herald disruptions in Global oil flows.

Dan Yergin, vice chairman of S&P Global and a Pulitzer Prize-winning conference organizer, stated in an interview: "This is an ongoing revolution in energy policy... the entire industry is gasping for air. I believe such a large scale of turmoil and adjustment has never occurred before."

After OPEC+ agreed to increase production as planned in April, crude oil prices fell to below $70 per barrel this week, a three-year low. Even before this, low oil prices in 2024 and rising costs of equipment and services have squeezed Energy companies. Large oil companies have been coerced, evidenced by massive layoffs and cuts in investment.

The second largest oil producer in the USA, Chevron, stated it will lay off up to 9,000 employees, while oilfield services company Schlumberger (SLB.US) indicated they are laying off staff as part of a restructuring. Meanwhile, Elliott Management Corporation has increased its Shareholding in oil giants BP PLC and US refiners Phillips 66 (PSX.US) to push for aggressive actions to change the performance of both companies.

Over the past year, global oil demand has grown modestly, partly due to the numerous new electric vehicles on the road, which has caused its automotive fuel demand to plateau. Refining margins have declined, severely impacting the performance of oil companies in 2024, with this situation expected to recur in 2025. Additionally, due to retaliatory tariffs, US Crude Oil Product exports may decline this year.

Dan Pickering, Chief Investment Officer of Pickering Energy Partners, stated: "It's no longer A plus B equals C. There are probably about nine equations. So many things are happening simultaneously; when you pull one string, you don't know where the other end of the string will lead."

In recent months, liquefied natural gas (LNG) has been a highlight. The USA has become the world's largest LNG exporter, and producers plan to expand significantly. Trump overturned former President Biden's decision to suspend new projects, which means producers may soon start approving these expansion projects.

Last Thursday, US Interior Secretary Doug Burgum visited the newly built Plaquemines LNG export facility in Louisiana by Venture Global, promoting American Energy and natural gas. The company will invest an additional $18 billion to expand the plant's capacity.

According to the US Energy Information Administration (EIA), global benchmark Brent Crude Oil Futures are expected to average $74.50 per barrel this year and only $66.46 next year, down from over $80 per barrel last year. In a low oil price environment, there are almost no signs that oil investment and production will increase. Oil companies focus on capital discipline, improving productivity, and shareholder returns, rather than drilling for more oil.

Josh Young, Chief Investment Officer of Bison Interests, stated: "Costs are much higher, which affects profitability. You start to see producers scale back funding. This is the exact opposite of what the president wants."

The rising costs of aging shale oil fields are also a challenge. US oil production is expected to increase by 0.38 million barrels per day this year, far below the 1 million barrels per day increases seen in recent years. Research from Morgan Stanley indicates that oil-producing nations' output is anticipated to grow by an average of 1% in 2025, while capital expenditures are expected to decline by 4%.

Pickering stated: "Shareholders say to adhere to capital discipline, return Cash / Money Market to shareholders, and then you have the most powerful people in the world. I think you are just paying lip service to the president, while you follow the shareholders' wishes."

Editor/jayden