Zabrel: Trump's oil and gas plan is failing
Exxon Mobil, the largest oil and gas company in the United States, expects an almost two billion profit reduction in the second quarter. Prices for hydrocarbons have fallen, and Trump has strangled the economy with tariffs. Similar reports are expected from other American companies, followed by a decrease in investment in the shale industry and drilling of new wells. This does not at all beat the task that Trump set for the industry: to significantly increase production. For more information, see the Izvestia article.
They didn 't finish it
The call "Storms, baby, storms" has become one of the main slogans of Donald Trump's election campaign. As soon as he occupied the White House, he declared a state of emergency in the energy sector, lifted bans on drilling and the issuance of licenses for new LNG projects. I set the task to achieve "energy leadership".
However, oil and gas prices have dropped significantly, largely due to Trump's actions. The widespread trade duties imposed by him risk slowing down the growth of the global economy and demand for energy resources. In addition, the costs of drilling and construction of new wells have been increased by the shale industry. In addition, OPEC+ has announced an increase in production.
The American mining industry has prepared for the worst. For example, ExxonMobil, the largest oil and gas company in the United States, warned that lower oil and gas prices had a negative impact on its results for the second quarter of 2025. According to documents sent by the company to the Securities and Exchange Commission (SEC), they risk losing up to $1.9 billion in net profit for the quarter. The fall in oil prices, according to preliminary estimates, reduced ExxonMobil's quarterly profit by $800 million to $1.2 billion, and the decline in gas prices by $300-700 million.
Analysts are confident that similar reports should be expected from other leading market players.
— US oil and gas companies, including Chevron and Conoco Phillips, are likely to report similar losses, as low prices and high costs (tariff increases of 10%) reduce profitability. Shale companies have suffered more: according to the forecast of the Federal Reserve Bank of Dallas, drilling will slow down by 15% due to losses and debts (70% of companies are lent), - says Alexey Kharitonenko, beneficiary of DCS Empire.
It's not profitable.
According to the U.S. Energy Information Administration, the average spot price of Brent crude oil was $68.13 per barrel in April and $64.45 in May, and rose to $71.44 in June. The minimum monthly price for Brent crude oil in the first quarter reached 72.73 dollars in March. This is not enough to maintain the profitability of drilling, and even more so to drill new ones.
— In order for all companies in the United States to continue producing profitably at existing wells, WTI must cost at least $75 (the current price is $68). And for shale deposits, new wells need to be drilled to maintain long-term production levels. For new ones, prices generally need to be at least $90 to break even," says Andrey Dyachenko, chief analyst for macroeconomics and oil markets at Proleum.
Global players were in the red due to the decline in prices after the peak values of 2022. Yes, the reserve funds accumulated at that time allow companies to stay afloat and implement projects, but not at full capacity, but only at 30-40% of the initial established plans. Losses of 30-40% of profits can also be attributed here, adds Dmitry Semenov, Chairman of the Board of Directors of Transinvest.
Not to force
So far, experts say, there are no prerequisites for an increase in oil prices, so the investment attractiveness of American shale is decreasing.
This was reflected in the report of the Bank of Dallas for the second quarter — about 45% of the surveyed companies announced a reduction in plans for new wells for the current year. And if the price does not exceed $60 during the year, up to 70% of companies plan to reduce their activity.
As Pavel Maryshev, a member of the expert council at the Russian Gas Society, emphasizes, prices below $ 70 per barrel exclude heavy grades of American shale oil from competition for a buyer.
— Middle Eastern and Russian oil has increased flexibility due to the low cost of production. That is, the price, which has settled at the level of 67-70 dollars, is quite satisfactory for exporters. The same cannot be said about Americans," the analyst points out.
Thus, Trump is burying his own plan for US energy leadership with his own hands.
So far, companies have been shutting down drilling rigs and cutting costs, contrary to the president's promises to "accelerate" production. Chevron and BP have announced the reduction of 15,000 jobs worldwide. And the twenty largest U.S. shale companies, according to the research firm Enverus, have cut capital expenditure budgets for 2025 by about $1.8 billion (3%).
It will not be possible to simply negotiate with companies so that they increase production to satisfy Trump's political ambitions. To ensure growth, it is necessary either to reduce costs (tariffs, rates and the fight against immigrants do not contribute to this), or to increase sales (for this it is necessary either to withdraw a major player from the world market, or to significantly accelerate the growth of the global economy — neither of which the United States can do "with a click"), summarizes Andrey Dyachenko.
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