Latest news with #JimBurkhard
Forbes
14-05-2025
- Business
- Forbes
Tariffs, Falling Prices, And The Tipping Point For U.S. Oil Production
Gas prices are displayed at a gas station in Streamwood, Ill. (AP Photo/Nam Y. Huh) For the first time in more than a decade, U.S. crude oil production is projected to decline in the coming year. That's not just a headline—it's a flashing warning light for policymakers, investors, and the broader economy. According to S&P Global, falling prices are already forcing drillers to scale back their operations, with the expectation that the U.S. is on course to see its first annual drop in domestic oil output since the fracking boom began. What's behind this reversal? A convergence of global economic uncertainty, rising OPEC+ production, and self-inflicted harm from the Trump administration's tariff campaign. The very tools meant to protect American industry could threaten its energy independence. S&P analysts recently issued a stark assessment that tariffs and weakening global growth are 'significantly cutting into global oil demand,' driving prices lower and forcing U.S. shale producers to hit the brakes. That drop in investment and activity is already visible. Rig counts are falling. Frac crew numbers are down. And capital budgets are being slashed. 'A price-driven decline in U.S. production would be a pivot point for the oil market—and set conditions for a potential price recovery,' said Jim Burkhard, S&P's head of crude oil research. But for the industry and the nation, that price recovery may come too late to stave off job losses, supply constraints, and a reduced geopolitical edge. President Trump has pointed to falling gasoline prices—now averaging $3.18 per gallon nationwide—as evidence that his economic policies are working. 'We're drilling like crazy,' he told NBC News last week. But that claim doesn't hold up to scrutiny. Rig counts are flat. Drilling activity is slowing, not surging. And the decline in oil prices has more to do with softening demand and surplus supply than any domestic production boom. West Texas Intermediate crude has hovered around $60 per barrel in recent weeks, a price point that many operators see as unsustainable for continued growth. Diamondback Energy, a respected player in the Permian Basin, is already acting. CEO Travis Stice recently warned that the shale industry is reaching a tipping point, where the geologic headwinds now outweigh the technological tailwinds that once drove the boom. Diamondback is slashing its capital budget by $400 million and pulling back rigs. 'We are taking our foot off the accelerator as we approach a red light,' Stice wrote in a letter to shareholders. Other producers may soon be forced to do the same. This underscores a growing tension in U.S. energy policy–Washington wants cheap fuel for voters but also robust production to support economic and national security goals. Those priorities are increasingly at odds. Oil producers can't operate at a loss forever just to keep gas prices down, and they can't plan the long-term investment needed to boost future production in an environment where trade policy is unpredictable and inflation remains sticky. Not all producers share Diamondback's cautious outlook. Chevron expects drilling in the Permian to rebound in the second quarter, and ExxonMobil is pushing to lower its breakeven price to $30 per barrel by 2030 through efficiency gains and scale. ConocoPhillips has so far held its activity steady, but its leadership signaled this week that they're watching the $50-per-barrel mark closely. Below that threshold, further cutbacks are likely. According to analysts at Wood Mackenzie, U.S. oil production will likely remain flat in 2025 and begin to decline in 2026 unless prices recover. Their latest forecast projects a slight dip of about 40,000 barrels per day in 2026, after previously expecting growth of more than 250,000 barrels per day. If prices fall below $50, the outlook darkens further. We should be paying close attention. The U.S. oil and gas sector supports millions of jobs, drives investment in rural communities, and anchors our energy security. Tariff-driven price volatility and cost inflation risk undercutting those gains. Steel tariffs alone have already driven casing costs up more than 10%, reducing margins and weakening the case for new drilling. This isn't just an oil industry problem. When U.S. energy output declines, prices become more volatile. We cede influence to OPEC and petro-states like Russia and Iran. And we undercut one of America's greatest strengths–and President Trump's greatest successes–the rise of the U.S. as the world's top oil and gas producer. America's energy dominance was built through innovation, investment, and smart policy. If we want to maintain that leadership, the industry needs stability.
India Gazette
14-05-2025
- Business
- India Gazette
US may reduce oil production because of sluggish demand and falling crude prices: S&P
New Delhi [India], May 14 (ANI): United States may reduce its oil production which could lead to an annual decline in output in 2026 due to the sluggish demand and falling crude prices, according to a new analysis by S&P Global Commodity Insights. The report further added that slowing global oil demand, extreme uncertainty about the future of US trade and a coming supply surplus are expected to hobble US oil production growth. The S&P Global Commodity Insights Global Crude Oil Markets Short-term Outlook adds that global oil (total liquids) demand growth to average 750,000 barrels per day (b/d) in 2025, a downward revision of 500,000 b/d from the prior outlook. 'Although the magnitude of a potential economic and oil demand downturn is as uncertain as the future course of U.S. tariffs, the impact will be negative. Initial warning signs of a potential downturn are only starting to come into view. The level of severity is now the big question,' as per Jim Burkhard, Vice President and Global Head of Crude Oil Research, S&P Global Commodity Insights. The new demand outlook represents a significant shift in momentum following strong oil demand growth in the first quarter of the year when demand grew by an estimated 1.75 million b/d year-over-year. In contrast, demand growth for the remaining quarters of year is now expected to average 420,000 b/d, the report added. The report adds that the total U.S production for 2025 is expected to average 13.46 million b/d (gain of 252,000 b/d year-over-year) before falling back to 13.33 million b/d for 2026--a 130,000 b/d decline. 'U.S. oil production growth has been a dominant feature in the oil market since 2022. A price-driven decline in U.S. production would be a pivot point for the oil market--and set conditions for a potential price recovery. But much will depend on the severity of an economic slowdown and the impact on demand growth beyond 2025,' Burkhard added. Ian Stewart, Associate Director, S&P Global Commodity Insights said that dizzying changes to U.S. tariffs--both real and proposed--are taking their toll on market sentiment. 'Our current outlook assumes that there will ultimately be some movement away from trade barriers to China as well as signs of progress in U.S. trade talks with Europe, Japan and other major trading partners. That means that the risk for additional downside is very real. Any periods of price strength are likely to be fragile,' Stewart added. (ANI)
Time of India
14-05-2025
- Business
- Time of India
Global oil demand growth forecast cut by 500,000 b/d for 2025: S&P Global
New Delhi: Global oil demand growth is now projected to average 750,000 barrels per day (b/d) in 2025, a downward revision of 500,000 b/d from the previous outlook, according to the latest analysis by S&P Global Commodity Insights. The report cites extreme uncertainty surrounding U.S. trade policy and a likely supply surplus as key reasons for the revision. This marks a significant slowdown following an estimated year-over-year increase of 1.75 million b/d in the first quarter of 2025. For the remaining quarters, demand growth is expected to average 420,000 b/d. Jim Burkhard, Vice President and Global Head of Crude Oil Research at S&P Global Commodity Insights, said, 'Although the magnitude of a potential economic and oil demand downturn is as uncertain as the future course of U.S. tariffs, the impact will be negative. Initial warning signs of a potential downturn are only starting to come into view. The level of severity is now the big question.' The report also revises U.S. crude oil production expectations, projecting a year-on-year decline in 2026 for the first time in nearly a decade—excluding the COVID-19 pandemic year of 2020. After averaging 13.46 million b/d in 2025—a gain of 252,000 b/d over 2024—U.S. production is expected to fall to 13.33 million b/d in 2026, a decline of 130,000 b/d. S&P Global noted that output from offshore and long-lead time projects will sustain production this year, while price-sensitive shale output may slow with a lag. 'U.S. oil production growth has been a dominant feature in the oil market since 2022. A price-driven decline in U.S. production would be a pivot point for the oil market—and set conditions for a potential price recovery. But much will depend on the severity of an economic slowdown and the impact on demand growth beyond 2025,' Burkhard added. The outlook is based on average prices in the mid-to-low USD 60s per barrel for Dated Brent, and in the low USD 60s to high USD 50s per barrel for West Texas Intermediate (WTI). However, the report notes that additional downside risk exists if trade barriers are not eased and if OPEC+ accelerates the reversal of existing production cuts. Ian Stewart, Associate Director at S&P Global Commodity Insights, said, 'Dizzying changes to U.S. tariffs—both real and proposed—are taking their toll on market sentiment. Our current outlook assumes that there will ultimately be some movement away from trade barriers to China as well as signs of progress in U.S. trade talks with Europe, Japan and other major trading partners. That means that the risk for additional downside is very real. Any periods of price strength are likely to be fragile.' A previous analysis by the firm estimated that sustained WTI crude prices at USD 50 per barrel could lead to a drop of more than 1 million b/d in U.S. Lower 48 onshore production over a 12-month period.
Axios
12-05-2025
- Business
- Axios
Despite "drill baby drill," oil production seen to drop slightly
The Energy Department used a classic "Simpsons" meme Saturday to promote"drill, baby, drill" — but new analysis shows the challenge of making it stick outside of Springfield. The latest: U.S. crude production should drop slightly next year, S&P Global Commodity Insights said Monday. The firm also revised its global demand growth estimate down sharply. Why it matters: The production forecast — in S&P's first such outlook since the April 2 tariff rollout — would be the first year-over-year U.S. decline in roughly a decade aside from the 2020 COVID crisis. Yes, the dip it envisions is pretty small and would follow modest growth this year. But it's nonetheless a shift at a time when President Trump is vowing to "unleash" U.S. energy. The intrigue: It's all fluid! Crude prices jumped Monday morning on news U.S. and China will slash their tariffs on each other for 90 days. The U.S. benchmark WTI gained 4%, trading around $63.46 per barrel. The big picture:"A price-driven decline in U.S. production would be a pivot point for the oil market — and set conditions for a potential price recovery," S&P VP Jim Burkhard said in a statement. "But much will depend on the severity of an economic slowdown and the impact on demand growth beyond 2025," he said. State of play: The accelerated increase in OPEC+ barrels and economic headwinds from trade wars are prompting bearish predictions. S&P now sees global demand growing 750,000 barrels per day (bpd) this year, down from their prior estimate of 1.25 million. Its findings are based on Brent crude averaging in the mid-to-low $60s per barrel for the remainder of this year, with WTI in the $60s or high $50s. There's additional risk if trade tensions don't cool and OPEC+ keeps quickly unwinding production curbs. How it works: S&P sees U.S. crude production averaging 13.46 million bpd this year, about 250k above 2024. While shale production is fairly nimble, responses to price changes still have a lag time, and new barrels from offshore wells and other long lead time projects are less price-sensitive, S&P notes. But next year it sees output dipping to 13.33 million bpd. What we're watching: How various analyses shift in months ahead with the never-a-dull-moment changes in trade friction.
