The US oil and gas industry received a shot in the arm with the Trump Administration’s eased regulatory requirements in a number of areas, but the very same administration is also instilling increased uncertainty among US oil and gas producers with the shifting and highly unpredictable tariff and trade policies.
Oil Industry Nervously Awaiting Tariff Fallout
In what is already a maturing US shale industry, companies have seen increased market uncertainty due to President Donald Trump’s erratic trade policies.
Expectations of weaker economies – and even recessions, due to the threatened, implemented, and withdrawn tariffs led to significant drop in oil prices in April. For many shale producers, drilling new wells may not be profitable at benchmark US WTI oil prices of below $60 per barrel.
Analysts at Rystad Energy now expect onshore Lower-48 production in the US to fall short of the record high output of 11.37 million barrels per day (bpd) of oil, achieved in November 2023, until at least June of this year.
But even this more pessimistic outlook faces serious downside pressure should the recent price downturn hold, forcing operators to cut back on rig activity, says Matthew Bernstein, Vice President, North America Oil and Gas Research at Rystad Energy.
Even before the market rout in April triggered by the chaotic tariff policies, publicly traded US firms guided plans to increase volumes by roughly 2.5 percent in 2025 while reducing spending by more than 6 percent. Much of this growth, which is now at risk due to the collapse in prices, is driven by some of the largest diversified public players and supermajors, capable of diverting cash flows from global operations to fund more growth-oriented programs in US tight oil, while still maintaining capital discipline at a corporate level, Rystad Energy said.
Half-cycle breakeven prices of most wells being drilled today are in the $50 per barrel range, but the intelligence firm estimates that public shale E&Ps need more than another $9 per barrel to cover shareholder returns.
So, it’s roughly $60 per WTI barrel price for companies to cover dividends and buybacks.
“Rystad Energy has long maintained that presidents have very few supply-oriented policy measures at their disposal to increase US oil output. Doing this while also bringing down prices at the same time is even more unrealistic, as producers see WTI in the $70 per barrel range as supportive of only modest growth,” Bernstein commented.
Wood Mackenzie analysts expect the uncertainty and the oil price volatility of recent weeks to hit US oil production growth, investments, and the oilfield services sector.
“The oil industry has ingrained institutional knowledge from the price crashes in 2015 and 2020 and is ready to act swiftly in a downturn. While the US administration targets both lower prices and ‘Drill, baby, drill’, we’re more likely to see ‘Delay, baby, delay’”, said Fraser McKay, Head of Upstream Analysis at Wood Mackenzie.
“If operators and the supply chain anticipate a period of prolonged low prices, it would send shockwaves through the industry. This near-term uncertainty becomes an investment killer, precisely when the focus should be on potential long-term demand growth.”
Due to shale operator flexibility, the US industry would be the first to cut spending if oil prices slide further, according to WoodMac.
At current market conditions with rising OPEC+ supply, near-term uncertainty, and price declines, global upstream investment could drop this year for the first time since 2020, the energy consultancy reckons.
US Upstream M&A Hits $17 Billion in Q1
While US upstream mergers and acquisitions hit $17 billion in the first quarter of 2025, activity is likely to sink later this year amid oil price volatility and declines, OPEC+ adding more production to the market, and the US tariff threats, Enverus Intelligence Research (EIR) said at the end of April.
Upstream M&A opened 2025 with $17 billion in deal value, the second-best start to a year since 2018. However, activity was disproportionately driven by one company, Diamondback Energy, which accounted for nearly 50 percent of total value between its acquisition of Double Eagle IV and a dropdown of minerals to its affiliate Viper Energy Partners.
According to Enverus, apart from Diamondback, buyers were already feeling the pressure of limited acquisition opportunities and high asking prices for undeveloped drilling inventory. Upstream companies will also have to navigate significant headwinds from falling oil and equity values. Historically, lower oil prices discourage M&A deals, Enverus noted.
“Upstream deal markets are heading into the most challenging conditions we have seen since the first half of 2020,” said Andrew Dittmar, principal analyst at EIR.
“High asset prices and limited opportunities are colliding with weakening crude.”
Sellers would be unwilling to sell assets at a discount, while potential buyers cannot afford to pay recently seen prices after oil declined. As a result, “The standoff between those two groups around fair asset pricing is set to sink M&A activity,” Dittmar said.
Ultimately, private equity firms and the large-cap E&Ps with strong balance sheets could be the winners from the volatility as they would be ready to return to considering M&As once oil prices stabilize, the analyst added.
US Administration Eases Energy Permitting and Production
In April the U.S. Department of the Interior said it would implement emergency permitting procedures to accelerate the development of domestic energy resources and critical minerals, in response to President Trump’s declaration of a National Energy Emergency.
These measures are designed to expedite the review and approval, if appropriate, of projects related to the identification, leasing, siting, production, transportation, refining, or generation of energy within the United States. The new permitting procedures will take a multi-year process down to just 28 days at most, the Interior said.
The Department will utilize emergency authorities under existing regulations for the National Environmental Policy Act, Endangered Species Act, and the National Historic Preservation Act. The procedures will significantly enable faster permitting timelines—reducing processes that typically take several months or years to just weeks.
“We are cutting through unnecessary delays to fast-track the development of American energy and critical minerals—resources that are essential to our economy, our military readiness, and our global competitiveness,” said Secretary of the Interior Doug Burgum.
Secretary Burgum has also directed the Bureau of Ocean Energy Management (BOEM) to initiate the first step in a robust public engagement process to develop a new schedule for offshore oil and gas lease sales on the U.S. Outer Continental Shelf.
Once finalized, the 11th National OCS Program will replace the current 10th Program (2024–2029), which includes just three lease sales over five years—all located in the Gulf of America. While BOEM continues work to complete those sales, development of the 11th Program will proceed concurrently.
The American Petroleum Institute (API) welcomed the start of drafting of a new offshore leasing programme, with Vice President of Upstream Policy Holly Hopkins saying,
“A new and more predictable five-year program is a big step forward for American energy dominance, and we look forward to working with policymakers to develop a leasing program that reflects both the reality of global energy demand and the benefits of offshore energy production.”
The Department of the Interior has also announced a policy advancement aimed at boosting offshore oil output in the Gulf of America. The Bureau of Safety and Environmental Enforcement implemented new parameters for Downhole Commingling in the Paleogene (Wilcox) reservoirs, expanding the allowable pressure differential from 200 psi to 1500 psi.
This change, the result of extensive technical consultation with offshore industry leaders, could increase production output by about 10 percent, which would translate into over 100,000 barrels per day (bpd) production increase over the next ten years, the Interior says.
API welcomed this policy, too. The oil lobby’s Hopkins commented that the announcement “ensures new technologies and innovation can be fully leveraged to support safe and efficient offshore oil production in the Gulf as a critical source of affordable energy, government revenue and national security.”
