An oil pump is seen in a field on April 08, 2025 in Nolan, Texas.
Brandon Bell | Getty images
President Donald Trump's trade war has launched the oil market in a deep uncertainty, triggering wild oscillations of raw prices, undermining the confidence of investors and compromising domestic production.
US crude oil reached a minimum of $ 55.12 Wednesday, down 23% compared to the closing price on April 2 when Trump announced its scanning plan to slap prices on more than 180 countries. The rapid withdrawal of prices threatens the president's agenda “Drill, Baby, Drill”, because companies will find it difficult to increase production for profit.
But West Texas Intermediate Organized a return after Trump suddenly reversed the course on Wednesday, announcing a 90 -day break on high prices for most of the business with the exception of China. The American benchmark switched 13% intraday from its low session to end at $ 62.35 in response.
Trump's decision to reduce prices to 10% for most countries has given the market a temporary stay of fears of a spiral trade war. But American oil producers are faced with an environment of “extreme uncertainty” which will make them hesitant with investment decisions, said Jim Burkhard, head of the petroleum market study at S&P Global Commodity Insights.
Weaker confidence
American crude oil fell by more than 4% on Thursday at less than $ 60 per barrel, traders focused on Trump's decision to increase the tariffs on China 125% lightening their eyes. And we do not know how negotiations with the dozens of countries that have obtained a stay will take place.
West Texas intermediate crude oil price in the last month
“There is a break – uncertainty has not disappeared,” said Burkhard about Trump's reversal. “Confidence for the future is lower now than it was a month ago and the prices are lower.”
“Can the United States negotiate with 70 countries at the same time? I don't think chaos is finished,” he said.
Trump’s approach to Trump on scale caused real damage, said Susan Bell, main vice-president of Rystad Energy raw markets. The safest option in times of uncertainty for businesses based on assets such as oil companies is to reduce capital spending, said Bell.
“There is a loss of confidence, not only in investment in the shale industry, but really investment in the United States,” she said.
Oil production has threatened
Shale oil companies have led to rapidly growing the United States in the largest gross producer in the world. These companies currently need American crude crude prices for an average of $ 65 per barrel to unravel new wells to profit, according to managers of 81 companies questioned by the Federal Reserve Bank of Dallas.
US gross prices at the bottom of $ 60 are the area where companies can start training less over the next six months, said Burkhard. Producers will have to decide either to reduce lucrative yields for shareholders, or to release their activity in the oil patch, he said.
About fifty platforms could be reduced immediately with more potentially on the blocking if prices remain at these levels, said Bell.
Goldman Sachs has reduced his price forecasts for WTI to $ 58 by December 2025 and $ 51 by the end of next year. US oil growth would be the flat line if the gross fell at a beach from $ 50 to $ 55 per barrel for a sustained period, Walt Chancellor said energy strategist at Macquarie Group.
Shale companies are also faced with the threat of Trump's steel prices, potentially increasing the cost of new 10%wells, said Bell. Companies would need even higher oil prices to unravel new wells in a profitable manner, she said.
“This adds to the costs at the time that … Oil prices are decreasing – it's another success, “said Burkhard about steel prices.
American shale producers have cracked in their criticism of Trump's pricing policy in anonymous responses to the Dallas Fed Energy Survey published in March.
A manager said: “Administration chaos is a disaster for raw materials markets.” Trump's call to “unravel, baby, forest” is a “myth and a populist rallying cry,” said the executive. “President's pricing policy is impossible for us to predict and has no clear objective,” said the person, calling for “stability”.
“I have never felt more uncertainty about our business during my career over 40 years of age,” said another executive at Dallas Fed.
US Energy Secretary Chris Wright admitted Tuesday that punishment prices will worry oil producers. Wright, founder and former CEO of the natural fracturing company, Liberty Energy, argued that Trump would lower the costs of producers by removing uncertainty around allowing and approving more pipelines and exporting terminals, which allows them to pump at lower prices.
“The lower prices are good for consumers, and as producers increase and lower the cost structure, they will also prosper at lower prices,” Wright to “Money Movers” from CNBC. “What you see at the moment is fear and uncertainty because the sausage is done,” he said about Trump's pricing policy.
The unpredictability caused by Trump's prices has also struck the stock of the company Wright founded. Liberty shares have been down 32% since April 2.
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