The Shale Oil Industry in the USA is facing its biggest crisis in recent years. Due to the impact of Trump's tariff policies combined with OPEC+'s decision to increase production, oil prices have significantly dropped by about 12% since last week, falling below the break-even point for many shale oil production companies. Industry insiders warn that if the current situation does not improve effectively, the shale industry may experience a collapse and bankruptcy wave similar to that during the COVID-19 pandemic in 2020.
Under the dual pressure of Trump's tariff policy and OPEC+ increasing production, the Shale Oil industry in the USA is facing the most severe test in recent years. Multiple industry executives have warned that this wave of oil price collapse has pushed some Shale Oil production companies to the brink of bankruptcy.
According to CCTV news, on April 2 local time, Trump announced a national emergency, imposing tariffs on all countries at a 'baseline tariff' of 10%, and imposing more personalized and higher 'reciprocal tariffs' on countries with the largest trade deficits with the USA.
Since Trump announced the liberation day tariff measures last week, US oil prices have cumulatively fallen by about 12%. Currently, oil prices have fallen below the breakeven point required by many Texas Shale Oil companies, causing deep concern across the entire industry. Industry insiders pointed out that if the current low oil prices persist, a large number of drilling rigs may be forced to shut down, and a new wave of production cuts may come.
At the same time, OPEC+ has decided to increase production, further intensifying market tensions. Under the dual pressure of increasing global supply and demand concerns, the survival space for US Shale Oil producers has been further compressed.
Kirk Edwards, president of Ratigo Petroleum and head of an independent oil company based in Odessa, Texas, stated:
"This scene immediately reminds me of the situation when the COVID-19 pandemic first broke out."
What he refers to is the situation in 2020 when the oil prices plummeted, leading to a cliff-like decline in demand, with oil prices briefly turning negative and a large number of USA oil companies going bankrupt and liquidating, causing the entire Shale Oil Industry to fall into a winter.
In his view, the current plunge caused by the trade war is quite similar to that year, and it could even trigger another wave of industry restructuring or a wave of bankruptcies.
In the current situation, the USA Shale Oil Industry is facing triple blows: oil prices have fallen below the cost line, weakening profitability; OPEC is increasing production, exacerbating supply and demand imbalances; and global trade uncertainties are undermining investment expectations and market confidence.
Several industry executives have warned that if the policy and market environment cannot be effectively improved, USA Shale Oil may once again experience a replay of the '2020-style crisis.'
Editor/Lee
