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Diamondback Energy, Inc.’s FANG president recently demanded an explanation from the Trump administration over escalating tariffs and their impact on the U.S. shale industry. The company took the matter directly to social media and publicly called for clarification from the U.S. Energy Secretary, Chris Wright. It demanded an explanation of how the immense contribution of the shale industry to the U.S. economy aligns with the recent tariffs and the ongoing trade war.
A FANG representative emphasized the importance of the U.S. shale industry and stated that it is one of the few industries that has built itself in the United States, manufacturing on American soil and creating jobs while improving the trade deficit over the past decade.
Rising Pressure on Shale Producers
The company’s remarks came at a time when the shale industry is grappling with economic headwinds. The recent announcement of reciprocal tariffs by Donald Trump has brought about uncertainty across oil and energy markets, contributing to a sharp drop in oil prices. Since the announcement, the West Texas Intermediate has experienced a sharp decline that pushed prices to their lowest level in nearly four years.
The declining oil prices are concerning many shale producers as they require a breakeven price of $65 per barrel to operate profitably, according to the latest Dallas Federal Reserve survey. With margins tightening, the oil and energy companies are concerned about the risks posed by the administration’s energy and trade policies.
Risks Imposed by Federal Reserve Bank of Dallas Survey
For U.S. shale producers, 2025 has been a highly volatile and uncertain year. The companies are busy making multi-dollar acquisitions. On the other hand, Trump’s extensive tariffs are creating a panic over oil demand, leading to a global economic downturn.
Additionally, the Dallas Fed survey, announced last month, also sent signals of growing alarm among Texas drillers at the U.S. administration’s energy strategy and push for lower energy prices. Despite Trump's promise of American energy dominance, industry leaders argue that his administration’s unpredictability, particularly around tariffs, would force them to slow down their upstream spending.
According to many shale producers, the chaos and uncertainty under the new administration are making long-term planning difficult, leading to a cut in capital expenditures for 2025 and 2026. Many shale producers fear that a drop in oil prices to $50 per barrel — a target suggested by Trump's administration to combat inflation — would result in declining production as most drillers need at least $65 to break even. The leading oil companies warn that continued price pressure and unreliable trade policy could lead to declining output, even in strongholds like the Permian Basin.