As economic uncertainties rise from tariff policies, the oil and gas industry braces for reduced production investments and profits.
# Oil Giants Face Economic Headwinds Amid Trade Policy Strains
# Oil Giants Face Economic Headwinds Amid Trade Policy Strains
Leading U.S. oil companies report their lowest profits in years, disturbed by the trade impacts of tariffs and fluctuating crude prices.
In early May 2025, two of the largest U.S. oil firms, Chevron and Exxon Mobil, revealed a marked decline in their first-quarter profits, each reporting numbers far below expectations. The downturn reflects the broader economic landscape affected by trade policies instigated by President Trump, which have notably lowered consumer confidence and driven oil prices downward.
Recent data shows U.S. crude prices falling beneath $60 a barrel, a critical threshold that threatens profitability for many companies involved in exploration and drilling. This price drop—approximately $20 lower than pre-Trump inauguration levels—comes amid rising costs for essential materials, primarily due to the increasing tariffs imposed on steel and other imports.
As companies feel the pinch from these economic pressures, some drilling operations are already witnessing cutbacks. Baker Hughes, a key player in oil field services, noted a 3 percent decrease in the number of rigs operating in the Permian Basin, the largest oil-producing region in the United States, over the past month. They attribute this decrease to clients delaying discretionary expenses, predicting a further drop in industry spending as the year progresses.
In response to the challenging climate, Chevron has indicated its plans for reduced spending in 2025, consistently maintaining its production and investment forecasts. CFO Eimear Bonner remarked on their current approach, saying, "We’ll navigate cycles before. We know what to do."
The financial analyses presented by Chevron and Exxon reflect conditions prior to Mr. Trump's latest tariff announcements, coinciding with a shift within the OPEC Plus coalition, urging its member states to boost oil production in an attempt to stabilize the volatile market.
Recent data shows U.S. crude prices falling beneath $60 a barrel, a critical threshold that threatens profitability for many companies involved in exploration and drilling. This price drop—approximately $20 lower than pre-Trump inauguration levels—comes amid rising costs for essential materials, primarily due to the increasing tariffs imposed on steel and other imports.
As companies feel the pinch from these economic pressures, some drilling operations are already witnessing cutbacks. Baker Hughes, a key player in oil field services, noted a 3 percent decrease in the number of rigs operating in the Permian Basin, the largest oil-producing region in the United States, over the past month. They attribute this decrease to clients delaying discretionary expenses, predicting a further drop in industry spending as the year progresses.
In response to the challenging climate, Chevron has indicated its plans for reduced spending in 2025, consistently maintaining its production and investment forecasts. CFO Eimear Bonner remarked on their current approach, saying, "We’ll navigate cycles before. We know what to do."
The financial analyses presented by Chevron and Exxon reflect conditions prior to Mr. Trump's latest tariff announcements, coinciding with a shift within the OPEC Plus coalition, urging its member states to boost oil production in an attempt to stabilize the volatile market.
