US oil companies are bracing themselves for the worst as plunging oil prices below $60 per barrel due to an escalating trade war may force them to cut back on share buybacks and capital expenditures. Analysts say that if the downturn persists, producers might reduce their 2025 capex and dividend payouts.
The slide in Brent crude and West Texas Intermediate (WTI) futures is a result of sweeping tariffs imposed by US President Donald Trump, which have sparked concerns of a recession amid signs of higher supply from top producers. Analysts warn that higher service costs and energy transition spending have narrowed the financial buffers of oil companies, making it harder for them to maintain shareholder returns.
Some analysts predict that even major players like Exxon Mobil and Chevron might struggle to stay afloat if prices remain near $60 per barrel. RBC Capital Markets estimates that Exxon’s breakeven point is $88 per barrel, while Chevron’s is at $95 per barrel.
The market will be closely watching the earnings reports of US oil companies later this month to see how they plan to navigate this challenging period.
Source: https://finance.yahoo.com/news/us-producers-face-tough-choices-141412616.html