Over the past decade, the US shale oil revolution has reshaped the global oil landscape with disruptive technological breakthroughs that have catapulted the US to the top spot as the world’s largest oil producer. Yet this“Energy Miracle” is being challenged as never before. The US shale industry appears to have reached an inflection point as global oil prices remain low, production costs surge and traditional producers fight back. US shale oil production may have peaked and the global energy“Balance of power” is likely to tilt away from the previously strong US oil companies towards traditional producers, according to some Gulf state media. However, some analysts believe that the U. S. economic policy or affect the domestic oil industry more important factors.
US shale oil ‘coming to an end’ ?
In the past 10 years, the US shale oil revolution has flourished, reshaping the world’s energy landscape with a steady flow of low-cost crude. However, the boom is now facing challenges and industry voices have even warned it will“Come to an end”.
Tariffs imposed by the Donald Trump administration on key materials such as steel and aluminium have pushed up the price of those materials, pushing up the cost of oil drilling equipment. Second, US oil companies have been hit by falling oil prices. As of Tuesday, international oil prices were trading at around $62 a barrel, down 23% from this year’s high and nearly half from their recent peak of $120 a barrel in June 2022. US oil production is expected to fall 1.1 per cent next year to 13.3 m b/d in the face of lower prices caused by oversupply and fears of a trade war by Washington, according to S & P data analysis. Shale oil drilling has made the United States the world’s largest oil producer. “We are on high alert,” Guaspare, chief executive of oklahoma-based Devon Energy, was quoted as saying. “We are entering a more difficult environment.”
During the 2024 presidential campaign, Republican candidate Donald Trump tried to position himself as the face of the American oil industry against the new energy industry, the economist reported, but after he took office, global demand for fossil fuels took a hit from Washington’s trade war. US crude oil prices have fallen from $80 a barrel to about $60, a problem for the country’s shale fields, which account for about two-thirds of domestic production. For some small and medium-sized shale drillers in the US, prices are now“Uncomfortably low”
US oil companies are cutting capital spending in response to market uncertainty. The Top 20 US shale oil and gas producers, excluding exxonmobil and Chevron, have cut their 2025 capital expenditure budgets by about $1.8 BN, or 3 per cent, according to Enverus, the energy consultancy. For example, texas-based rattlesnake energy and Cabot energy cut capital spending by $400 million and $300 million, respectively, and plan to reduce the number of drilling rigs.
The trend suggests companies are cautious about future markets, prioritising cash flow and shareholder returns. The number of active onshore drilling rigs in the US has fallen to 553,26 fewer than in the same period last year, according to Baker Hughes, a US oilfield services company, in a sign of waning activity.
The US shale oil industry has experienced years of development and production has reached an all-time high and reached a bottleneck, Wang Lee Eon, crude oil analyst at Longzhong Information, told the Global Times on the 27th, in addition, international oil prices have been hovering around the low level of around US $60 per barrel, putting pressure on the profit margins of US oil companies, “On this basis, the increase in the cost of shale oil production as a result of the US government’s tariff policy has undoubtedly further exacerbated the severity and complexity of the problem.”
A repeat of the“Oil price war”
The challenges facing the US shale industry come as long-time OPEC OPEC and its non-OPEC partners, known collectively as OPEC + , plan to act. Russian“Reporter” net 26 to“The end of the American Miracle: the official end of the shale oil revolution in the United States,” reported that in this year after the decision to increase production, oPEC + is set to announce a third big production increase for July at meetings on May 28th and June 1st, even more than planned.
The report said OPEC + ‘s increase was aimed at putting direct pressure on us shale oil producers and regaining market share, a repeat of the 2014-2016 oil price strategy. Earlier, eight OPEC + members, including Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan and others, decided to start from April 2025, gradually restore production to the 2.2 m b/d it had previously cut.
OPEC + may be planning a new round of“Price strangulation” against us shale oil producers, industry analysts have warned, trying to drive down oil prices by increasing production, forcing high-cost shale oil companies out of the market. The strategy is similar to what happened in 2014, when OPEC’s production surge sent oil prices tumbling and bankrupted a number of US shale oil companies. With West Texas light crude hovering around $61 a barrel, it is close to the break-even point for many shale oil producers. If OPEC + pushes daily production higher, international oil prices could fall below $50 a barrel, triggering a deep shake-out in the shale oil industry.
The Saudi economic daily quoted industry experts as saying that the move by the oil producer led by Saudi Arabia is aimed at regaining the global market share taken by US shale oil in recent years, low oil prices put pressure on high-cost U. S. shale oil. Saudi Arabian Peninsula Television commented that some Middle Eastern oil-producing countries felt that, against the backdrop of tighter capital, taxes and environmental regulations, uS shale oil companies will struggle to compete with OPEC + in a price war for long.
But the oil price report also argues that OPEC + ‘s“Big Bet” is just as risky. A prolonged period of oil prices below $60 a barrel would see the country’s annual fiscal deficit widen to 6.2 per cent of GDP, with the International Energy Agency Russian ruble at risk of devaluation, according to the latest report from the International Energy Agency.
Lee Eon said OPEC + ‘s search for an increase in production was largely based on market judgment that the global economy, while still weak, was recovering. Lee Eon said OPEC + also did not adopt a one-stop strategy to increase production, but rather a phased increase, as they also feared a sudden surge in supply would further depress prices.
The Rossiyskaya Gazeta Report on the 26th quoted Russian economist Ivan Tymonin as saying that for Russia and other OPEC + members, accelerating oil production has a dual effect: it provides an opportunity to increase energy export revenues in the short term, but in the long term, adding 300,000-400,000 barrels a day to the market could push international oil prices close to the lower end of a range of about $50 a barrel. OPEC + could halt production if oil prices fall significantly below current levels.
Who will reshape the global energy landscape?
The US shale oil revolution has made the US the world’s largest oil producer, changing the global energy landscape. However, the current multiple challenges may shake the U. S. Energy dominance. Gulf online, the United Arab Emirates, reported recently that US shale oil production peaked and capital contraction, including the UAE gulf countries to expand market share room. The likely peak in US shale oil production, combined with companies’ active or passive Al Jazeera, provides a “Window of time” for a return to OPEC + , according to Qatari analysis. In the future, the market is likely to become more dependent on supplies from traditional oil producers and the US’s energy dominance could be eroded. Qatar’s“Gulf Times” that the U. S. shale oil industry downward trend may strengthen OPEC + ‘s dominant position in the global energy market. A recent report in Riyadh, a Saudi newspaper, argues that the US shale oil expansion model, “Built on capital”, is unsustainable.
Lee Eon told the Global Times that, in his view, US shale oil may be under some pressure in the short term, but “It will not end” in the future. “US shale oil has been commercialised since 2008 and after many years of development, the industry system and market operations are very mature. In 2014 it was a price war launched by OPEC and it is still going strong,” Lee Eon said, for the foreseeable future, the US, Saudi Arabia and Russia will continue to dominate the fundamentals of the global crude oil market.
Compared with the OPEC + Challenge, many U. S. oil companies believe that the greater challenge comes from the impact of economic expectations on oil demand. US National Public Radio (NPR-RRB- recently reported tWashingtongton’s trade war has caused anxiety in the oil sector. Many oil and gas executives, especially at large companies, initially celebrated Donald Trump’s return to the White House. But recent optimism about higher oil company profits appears to have faded as recession fears have mounted. “I think the tariffs are counterproductive for Washington,” Sharpe, head of Merrion Oil and Gas, a new mexico-based Oil producer, was quoted as saying