The two largest oil corporations in the United States, Exxon Mobil and Chevron, disclosed their lowest profits for the first quarter in several years amidst the ongoing trade disputes initiated by President Trump. The economic consequences of the trade war have resulted in reduced consumer confidence and a decline in oil prices, with U.S. crude dipping below $60 a barrel—a level that significantly hampers profitability for many drilling operations.
Current crude oil prices are approximately $20 lower per barrel compared to the time before Trump assumed office. Alongside this dip in oil prices, drilling and production companies face rising costs for materials due to imposed tariffs, which have added further strain on their operations. Recent data from Baker Hughes indicates a 3% reduction in the number of active drilling rigs in the Permian Basin, the largest oil field in the U.S., reflecting a trend where companies are delaying discretionary spending.
Chevron previously announced plans to reduce their capital expenditures in 2025, which remain unchanged, as they evaluate the market landscape. Eimear Bonner, CFO of Chevron, expressed confidence in their ability to manage through these economic cycles: “We’re comfortable with where we are right now. We’ve navigated cycles before. We know what to do.”
Both Chevron and Exxon’s recent financial figures illustrate conditions prior to Trump's latest tariff announcements, which coincided with OPEC members' surprising decision to expedite oil production increases. This combination of market factors indicates a challenging period ahead for major oil players as they strive to maintain stability amidst fluctuating prices and increased costs.
