by Andreas Exarheas|RigZone.com| In a market update sent to Rigzone by the Rystad Energy team late Monday, Rystad warned that, in the current price environment, it predicts “significant risks to U.S. operators who could be forced to bring down their pace of production growth”.
The company highlighted that U.S. President Donald Trump’s announcement of tariffs on April 2 “sent shockwaves across the globe”, adding that the stock market witnessed “its second-lowest trading day since 2020”.
“The corporate reality for public players means that already modest growth could be at risk if prices remain near $60 per barrel,” Matthew Bernstein, Rystad Energy Vice President, North American Oil and Gas, said in the update.
“Rystad estimates that the new ‘all-in’ breakeven cost for many U.S. oil operators is now above $62, which includes higher hurdle rates, dividend payments, and debt service costs,” he added.
“With Lower-48 production growth already unlikely outside the Permian, a downshift in the country’s most prolific oil basin would decelerate the production growth rate in 2025, should prices remain subdued,” Bernstein warned.
In the update, the Rystad VP said the business model embraced by U.S. oil producers over the past several years has become far more challenging to maintain with prices below this level.
“This means that some combination of near-term activity levels, investor payouts or inventory preservation will need to be sacrificed to defend margins,” Bernstein said.
“While different operators have different sensitivities to the above factors, activity and production will be threatened the most,” he added.
Rystad noted in the update that it believes that mid-cap public operators in the Permian, specifically the Delaware basin, are especially at risk in a prolonged period of oil prices in the low $60s.
“This is because these operators here are faced with steep first-year production declines, high well costs, and hefty capital return requirements, while also operating in an environment where large players have consolidated much of the most commercial inventory,” the company highlighted.
In a market analysis sent to Rigzone on Tuesday morning, Hassan Fawaz, Chairman and Founder of GivTrade, warned that “crude oil futures could remain under pressure following a volatile session on Monday”.
“Prices experienced a sharp decline during the last few sessions due to concerns over the potential impact of U.S. tariffs, which could trigger an economic slowdown and reduce global demand,” Fawaz said.
In that analysis, Fawaz noted that the oil market outlook remains uncertain, “with U.S. President Trump’s tariffs serving as a significant source of volatility”.
Rigzone has contacted the White House for comment on Rystad’s update and Fawaz’s analysis. Rigzone has also contacted the American Petroleum Institute (API) for comment on Rystad’s update. At the time of writing, the White House and the API have not responded to Rigzone.
In its latest short-term energy outlook (STEO), released on March 11, the U.S. Energy Information Administration (EIA) projected that U.S. crude oil production, including lease condensate, will average 13.61 million barrels per day in 2025 and 13.76 million barrels per day in 2026.
The Federal Gulf of America is projected to produce 1.80 million barrels per day of the 2025 forecast of 13.61 million barrels per day and the 2026 forecast of 13.76 million barrels per day, the EIA showed in its March STEO. Alaska is projected to produce 0.42 million barrels per day of the 2025 total and 0.44 million barrels per day of the 2026 total. Lower 48 states, excluding the Gulf of America, are expected to produce 11.39 million barrels per day in 2025 and 11.52 million barrels per day next year, the EIA’s March STEO showed.
The EIA’s next STEO, which will show updated production forecasts, is scheduled to be released on April 10.
To contact the author, email andreas.exarheas@rigzone.com
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