Trump's oil-industry supporters are said to be rattled by tariffs
Apr. 06, 2025 1:01 PM ET
By: Rob Williams, SA News Editor
Oil producers who backed Donald Trump’s presidential comeback with hopes of a fossil fuel revival are now facing unexpected fallout: collapsing oil prices and mounting financial pressure brought on by a deepening trade war, The Wall Street Journal reported on Sunday.
After Trump’s surprise tariff announcement and retaliatory measures from global partners, U.S. benchmark crude prices dropped nearly 14% in two days to $61.99 a barrel — levels not seen since 2021. The sharp decline threatens shale drillers’ investment plans and is forcing oil companies to reassess budgets and potential rig cutbacks.
The pain feels like a self-inflicted blow, Taylor Sell, chief executive of Element Petroleum in Midland, Texas, said to the Journal, likening the current disruption to past shocks like the pandemic.
Squeezed on 2 fronts
Producers are squeezed on two fronts: declining demand expectations from the trade dispute and increased output from OPEC+. Meanwhile, Trump’s steel tariffs are raising infrastructure costs for U.S. drillers, adding to the pressure.
Gasoline prices initially rose after Trump took office but are now expected to fall as crude continues to tumble. However, the drop in oil has wiped out tens of billions in market value across the sector. Shares of companies like Diamondback Energy (NASDAQ: FANG), Halliburton (NYSE: HAL) and Liberty Energy (NYSE: LBRT) have seen double-digit losses.
Frackers, leaner after years of debt reduction, are bracing for more cost cuts. If prices hover around $60 a barrel, analysts warn companies may delay spending or pause drilling altogether.
Industry job markets are also feeling the pinch. Major firms like Chevron (NYSE: CVX), ExxonMobil (NYSE: XOM) and ConocoPhillips (NYSE: COP) have announced thousands of job cuts through 2026 in efforts to manage costs following large acquisitions.
Despite campaign promises of energy prosperity, Trump’s tariff-driven strategy is sowing doubt among energy executives. A recent Dallas Fed survey captured the sentiment bluntly: “There cannot be ‘U.S. energy dominance’ and $50 per barrel oil.”
As the dust settles, oil companies are scrambling to adapt—cutting rigs, trimming budgets and watching markets nervously as the administration’s trade gamble plays out. |
