Projected crude-oil dip undercuts "drill baby drill" symbolism
Fresh projections add weight to a problem for President Trump's "drill baby drill" push — many companies won't follow along in this price and tariff landscape.
The big picture: A revised outlook from DOE's independent stats arm shows U.S. crude output sliding in the second half of 2025, and a small year-over-year drop in 2026.
It would be the first annual decline since COVID battered demand in 2020-2021.
Why it matters: Yes, the revisions are small and yes, the U.S. remains by far the world's top producer.
But the symbolism is big as the White House promotes its "energy dominance" agenda.
State of play: The Energy Information Administration yesterday estimated that U.S. output will dip 0.3% to average 13.37 million barrels per day in 2026.
It's the latest in several downward revisions this year, but the first that sees a decline — last month's version still estimated a very small rise over 2025.
Driving the news: EIA cited a steeper-than-expected drop in active rigs, adding "we forecast U.S. operators will drill and complete fewer wells through 2026."
S&P Global Commodity Insights goes further, projecting that 2026 will slide to an average of just under 13 mbd.
The intrigue: Onshore shale is the biggest part of U.S. output.
One big question is whether a total U.S. production decline next year would be a blip or an inflection point — at least without far higher prices on a sustained basis.
Remember that in early May, the CEO of Permian Basin heavyweight Diamondback Energy told shareholders that onshore U.S. production has likely peaked.
What they're saying: "It's peak shale at this price," oil analyst Rory Johnston, founder of Commodity Context, tells Axios.
"This is not a geological or kind of a fatalistic peak, but rather an economic one," he said in an interview.
The current prices and cost structure, especially with tariffs pushing costs up, "is not conducive to profitability for these firms, so they're going to start pulling back."
Yes, but: Lots of caveats here. One is that Trump's "dominance" agenda isn't only about crude, but rather LNG and more.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Miami Herald
29 minutes ago
- Miami Herald
Europe's growing fear: How Trump might use US tech dominance against it
LONDON -- When President Donald Trump issued an executive order in February against the chief prosecutor of the International Criminal Court for investigating Israel for war crimes, Microsoft was suddenly thrust into the middle of a geopolitical fight. For years, Microsoft had supplied the court -- which is based in The Hague in the Netherlands and investigates and prosecutes human rights breaches, genocides and other crimes of international concern -- with digital services such as email. Trump's order abruptly threw that relationship into disarray by barring U.S. companies from providing services to the prosecutor, Karim Khan. Soon after, Microsoft, which is based in Redmond, Washington, helped turn off Khan's ICC email account, freezing him out of communications with colleagues just a few months after the court had issued an arrest warrant for Prime Minister Benjamin Netanyahu of Israel for his country's actions in the Gaza Strip. Microsoft's swift compliance with Trump's order, reported earlier by The Associated Press, shocked policymakers across Europe. It was a wake-up call for a problem far bigger than just one email account, stoking fears that the Trump administration would leverage America's tech dominance to penalize opponents, even in allied countries like the Netherlands. 'The ICC showed this can happen,' said Bart Groothuis, a former head of cybersecurity for the Dutch Ministry of Defense who is now a member of the European Parliament. 'It's not just fantasy.' Groothuis once supported U.S. tech firms but has done a '180-degree flip-flop,' he said. 'We have to take steps as Europe to do more for our sovereignty.' Some at the ICC are now using Proton, a Swiss company that provides encrypted email services, three people with knowledge of the communications said. Microsoft said the decision to suspend Khan's email had been made in consultation with the ICC. The company said it had since enacted policy changes that had been in the works before the episode to protect customers in similar geopolitical situations in the future. When the Trump administration sanctioned four additional ICC judges this month, their email accounts were not suspended, the company said. Brad Smith, Microsoft's president, said concerns raised by the ICC episode were a 'symptom' of a larger erosion of trust between the United States and Europe. 'The ICC issue added fuel to a fire that was already burning,' he said. Khan has been on leave from the ICC since last month, pending a sexual misconduct investigation. He has denied the allegations. An ICC spokesperson said it was taking steps to 'mitigate risks which may affect the court's personnel' and 'taking extensive measures to ensure the continuity of all relevant operations and services in the face of sanctions.' The episode has set off alarms across Europe about how dependent European governments, businesses and citizens are on U.S. tech companies like Microsoft for essential digital infrastructure -- and how hard it will be to disentangle themselves. Concerns about how else Trump might leverage technology for political advantage has jump-started efforts across the region to develop alternatives. Casper Klynge, a former Danish and European Union diplomat who worked for Microsoft, said the episode was in many ways the 'smoking gun that many Europeans had been looking for.' 'If the U.S. administration goes after certain organizations, countries or individuals, the fear is American companies are obligated to comply,' said Klynge, who now works for a cybersecurity company. 'It's had a profound impact.' The tech debate adds to an increasingly fractious U.S.-European relationship over trade, tariffs and the war in Ukraine. Trump and Vice President JD Vance have criticized how Europe regulates U.S. tech companies, and U.S. officials have made digital oversight and taxation part of ongoing trade negotiations. European regulators have argued that they need to be able to police the biggest digital platforms in their own countries without worrying that they will face political pressure and punishment from a foreign government. 'If we don't build adequate capacity within Europe, then we won't be able to make political choices anymore,' said Alexandra Geese, a member of the European Parliament. Since Edward Snowden's leak of scores of documents in 2013 detailing widespread U.S. surveillance of digital communications, Europeans have sought to diminish their reliance on U.S. tech. Lawmakers and regulators have targeted Apple, Meta, Google and others for anticompetitive business practices, privacy-invading services, and the spread of disinformation and other divisive content. Yet without viable alternatives, institutions across the region have turned to U.S. digital services. Amazon, Google, Microsoft and other U.S. firms control more than 70% of the cloud computing market in Europe, which is the essential way for storing files, retrieving data and running other programs, according to Synergy Research Group. The ICC has been a longtime customer of Microsoft, which provides the court with services including the Office software suite and software for evidence analysis and file storage, according to an ICC lawyer who declined to be identified discussing internal procedures. Microsoft has also provided cybersecurity software to help the court withstand digital attacks from adversaries like Russia, which is being investigated for war crimes in Ukraine. In February, after Trump issued penalties against Khan, Microsoft met with ICC officials to decide how to respond. They concluded that Microsoft's broader work for the court could continue but that Khan's email should be suspended. He switched his correspondence to another email account, said a person who has communicated with him. Sara Elizabeth Dill, a lawyer who specializes in sanctions compliance, said the Trump administration was increasingly using sanctions and executive orders to target international institutions, universities and other organizations, forcing companies to make hard choices about how to comply. 'This is a quagmire and places these corporations in a very difficult position,' she said. How tech companies with global services respond is especially important, she added, 'as the broad repercussions are what people and organizations are primarily worried about.' Microsoft and other U.S. companies have sought to reassure European customers. On Monday, Microsoft CEO Satya Nadella visited the Netherlands and announced new 'sovereign solutions' for European institutions, including legal and data security protections for 'a time of geopolitical volatility.' Amazon and Google have also announced policies aimed at European customers. Still, many institutions are exploring alternatives. In the Netherlands, the 'subject of digital autonomy and sovereignty has the full attention of the central government,' Eddie van Marum, the state secretary of digitalization in the Ministry of Interior Affairs, said in a statement. The country is working with European providers on new solutions, he said. In Denmark, the digital ministry is testing alternatives to Microsoft Office. In Germany, the northern state of Schleswig-Holstein is also taking steps to cut its use of Microsoft. In the European Union, officials have announced plans to spend billions of euros on new artificial intelligence data centers and cloud computing infrastructure that rely less on U.S. companies. Groothuis, the Dutch member of the European Parliament, said lawmakers in Brussels were discussing policy changes that would encourage governments to favor buying tech services from EU-based companies. 'The situation is not tenable, and we see a big push from European governments to become more independent and more resilient,' said Andy Yen, CEO of Proton. European tech companies see an opportunity to win customers from their U.S. rivals. Cloud service providers like Intermax Group, based in the Netherlands, and Exoscale, based in Switzerland, said they had seen a jump in new business. 'A few years ago, everyone was saying, 'They're our trusted partners,'' Ludo Baauw, Intermax's CEO, said of U.S. tech companies. 'There's been a radical change.' This article originally appeared in The New York Times. Copyright 2025
2 hours ago
Supreme Court rejects toy company's push for a quick decision on Trump's tariffs
WASHINGTON -- The Supreme Court on Friday rejected a push from an Illinois toy company asking for a quick decision on the legality of President Donald Trump's tariffs. Learning Resources Inc. wanted the justices to take up the case soon, rather than let it continue to play out in lower courts. The company argues the tariffs and uncertainty are having a 'massive impact' on businesses around the country and the issue needs swift attention from the nation's highest court. The justices didn't explain their reasoning in the brief order rebuffing the motion to fast-track the issue, but the Supreme Court is typically reluctant to take up cases before lower courts have decided. An appeals court is set to hear the case in late July. The company argues that the Republican president illegally imposed tariffs under an emergency powers law, bypassing Congress. It won an early victory in a lower court, but the order is on hold as an appeals court considers a similar ruling putting a broader block on Trump's tariffs. The appeals court has allowed Trump to continue collecting tariffs under the emergency powers law for now. The Trump administration has defended the tariffs by arguing that the emergency powers law gives the president the authority to regulate imports during national emergencies and that the country's longtime trade deficit qualifies as a national emergency.
Yahoo
2 hours ago
- Yahoo
Serica Energy's (LON:SQZ) Dividend Will Be $0.10
The board of Serica Energy plc (LON:SQZ) has announced that it will pay a dividend on the 25th of July, with investors receiving $0.10 per share. This means the annual payment is 10.0% of the current stock price, which is above the average for the industry. While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Investors will be pleased to see that Serica Energy's stock price has increased by 45% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield. Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Based on the last payment, the company wasn't making enough to cover what it was paying to shareholders. This situation certainly isn't ideal, and could place significant strain on the balance sheet if it continues. Looking forward, earnings per share is forecast to fall by 85.3% over the next year. If the dividend continues along the path it has been on recently, the company could be paying out more than double what it is earning, which is definitely a bit high to be sustainable going forward. Check out our latest analysis for Serica Energy Even in its relatively short history, the company has reduced the dividend at least once. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. The dividend has gone from an annual total of $0.0369 in 2020 to the most recent total annual payment of $0.242. This works out to be a compound annual growth rate (CAGR) of approximately 46% a year over that time. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious. With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Over the past five years, it looks as though Serica Energy's EPS has declined at around 5.9% a year. Declining earnings will inevitably lead to the company paying a lower dividend in line with lower profits. Overall, the dividend looks like it may have been a bit high, which explains why it has now been cut. The company isn't making enough to be paying as much as it is, and the other factors don't look particularly promising either. Considering all of these factors, we wouldn't rely on this dividend if we wanted to live on the income. Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 2 warning signs for Serica Energy that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
