Impacted by falling oil prices and the largest industry consolidation in a generation, the US oil industry has laid off thousands of workers and cut billions of dollars in spending. This trend may signal the end of the rapid crude oil production growth era that propelled the United States to become the world's largest oil producer.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as "OPEC+," are attempting to reclaim market share lost to the US and other oil-producing nations in recent years through increased production. The group reached an agreement on Sunday to further increase daily production by 137,000 barrels starting in October.

OPEC+'s continued production increases this year have led to international oil prices falling approximately 12%, with current prices only slightly above the break-even point for most US oil companies. This situation has forced companies to cut spending and jobs, with industry executives stating this could suppress US crude oil production.

If US crude oil production enters a plateau phase or even declines, it would weaken the country's influence in global markets and pose challenges to President Donald Trump's "American Energy Dominance" agenda.

ConocoPhillips, the third-largest US oil producer, announced last week that it would lay off up to 25% of its workforce. Earlier in February, competitor Chevron issued a similar announcement, stating it would cut 20% of its workforce, affecting approximately 8,000 employees.

Oilfield services company Schlumberger initiated layoffs earlier this year, and Halliburton has also reduced its workforce in recent weeks.

Analysis of second-quarter earnings reports by multiple companies revealed that due to falling oil prices and rising costs, 22 publicly traded US oil producers, including Occidental Petroleum Corp, ConocoPhillips, and Diamondback Energy, have collectively cut $2 billion in capital expenditures. This analysis did not include oil giants Exxon and Chevron.

Data from Baker Hughes shows that the number of US crude oil drilling rigs, a leading indicator of future crude oil extraction activities, has decreased by approximately 69 this year to 414 rigs.

"In the Permian Basin, we've shifted from a 'drill, drill, drill' pace to a 'wait and see' approach," said Kirk Edwards, president of Latigo Petroleum in Texas. The Permian Basin is the largest oil field in the United States.

He noted that the market needs oil prices to stabilize in the $70-75 per barrel range before drilling rigs can resume operations. On Monday, US West Texas Intermediate (WTI) crude futures were priced at $62.15 per barrel, compared to Friday's closing price of $61.87 per barrel.

"This has had a devastatingly destructive impact on domestic employment and will ultimately affect production," Edwards said. "At some point in the future, US crude oil production growth will plateau and begin to decline, and this gap will be filled by OPEC."

In 2024, thanks to the shale oil revolution, US crude oil daily production reached a historic peak of 13.2 million barrels. Currently, many analysts are predicting a decline in US crude oil production.

Research firm Energy Aspects expects US onshore crude oil daily production to decrease by 300,000 barrels in 2025 compared to last year; another firm, Wood Mackenzie, estimates that onshore crude oil daily production growth in the lower 48 US states (excluding Alaska and Hawaii) will only be 200,000 barrels, the smallest increase since the COVID-19 pandemic devastated energy demand in 2021.

According to data from the U.S. Energy Information Administration, in the last week of August, the lower 48 states' crude oil daily production averaged approximately 13.4 million barrels, below the peak of 13.6 million barrels reached in December last year.

Energy Aspects analysts Jesse Jones and Paola Romero stated in their report: "As upstream extraction activities stabilize at lower levels and operators focus more on operational efficiency and capital discipline, the moderate growth trend in crude oil production will further slow."

Equipment Idled, Jobs Reduced

Data from market consulting firm Primary Vision shows that in addition to declining drilling rig counts, the number of "fracturing crews" used to fracture underground rock to complete well construction has decreased by 39 units this year, dropping to 162 units as of last week, the lowest level since February 2021.

"Within three months, the Permian Basin has seen a reduction of 60 drilling rigs and 20 to 30 fracturing crews, which will inevitably be reflected in production," said Kaes Van't Hof, CEO of Diamondback Energy, during an August earnings call.

He added: "Given the continued market volatility and uncertainty, we don't see sufficient reason to increase extraction activities this year."

The Trump administration's trade policies and tariff measures have also driven up costs for key raw materials in the oil industry, such as steel and casing.

"We can clearly feel inflationary pressure rising, and tariffs are having a real impact, which will lead to slower global economic growth and suppress energy demand," said Ryan Lance, CEO of ConocoPhillips, at a staff meeting on Thursday.

As another major drilling company in the Permian Basin, Diamondback Energy stated that due to the Trump administration's steel tariffs, steel pipe casing costs for oil wells are expected to rise nearly 25% in 2025, causing break-even costs for almost all new drilling in the US this year to increase.

The company stated that operating costs as a percentage of total expenditures have risen from the historical average of approximately 20% to 35%.

In a video announcing layoffs to employees, ConocoPhillips mentioned that in 2024, the company's controllable costs per barrel of crude oil increased by approximately $2 compared to three years ago, reaching $13, further reducing the company's competitiveness.

"Tariffs have brought a degree of uncertainty, an impact that is not only reflected in the cost of internationally sourced equipment but also compounds overall inflationary trends," the company explained the reasons for rising costs during its August earnings call.

Texas labor market data shows that in the first six months of this year, the US oil and gas production industry lost 4,700 jobs. A report from the Energy Workforce & Technology Council shows that as of August, the number of jobs in the US energy services industry decreased by approximately 23,000 from the beginning of the year to 628,062.

Analysts point out that while efficiency improvements from advances in drilling technology have helped companies maintain stable production while reducing the number of drilling rigs, these efficiency gains are insufficient to drive continued growth in US onshore crude oil production, and in some basins, they are even struggling to maintain current production levels.

"The Trump administration's policies have restricted drilling activities in areas with potential for capacity and production efficiency improvements," said Josh Young, Chief Investment Officer at energy investment firm Bison Interests.