US President Donald Trump’s sweeping tariff announcement on April 2, 2025, triggered global economic upheaval, sending financial markets into a tailspin and raising alarms about the sustainability of US oil production growth.
The Dow Jones Industrial Average plummeted over 5.5 per cent on April 5 — its worst single-day drop since the pandemic — while the Nasdaq entered bear market territory, erasing $5 trillion in market value.
The tariffs, which include a baseline 10 per cent levy on all imports and targeted rates up to 104 per cent on Chinese goods, have intensified fears of a global recession and disrupted critical supply chains.
In the energy sector, Rystad Energy warns that US operators face heightened risks as tariffs compound existing pressures from subdued oil prices.
Matthew Bernstein, Rystad’s Vice President for North American Oil and Gas, emphasised that many producers now face breakeven costs above US$62 per barrel — a threshold threatened by current prices near US$60.
“Lower-48 production growth is already unlikely outside the Permian Basin,” Bernstein noted, adding that a slowdown in the Permian would significantly decelerate national output growth in 2025.
The Permian, responsible for nearly all US oil production gains this year, is particularly vulnerable.
Mid-cap operators in the Delaware Basin face steep challenges due to high well costs, rapid production declines, and investor demands for dividends.
Rystad highlights that these companies may need to sacrifice drilling activity or inventory preservation to maintain margins if prices remain low.
While direct impacts from steel tariffs on oilfield costs appear limited, the broader “policy whiplash” has created operational uncertainty.
Trump’s aggressive trade measures — including threats of additional tariffs on semiconductors and critical minerals — have destabilised global markets, further pressuring energy investors.
The administration’s focus on Treasury yields over equity markets as a policy gauge has also shifted financial dynamics, with JPMorgan analysts predicting a potential 2025 recession.
As retaliatory measures from China and other trading partners escalate, the intertwined risks of inflation, supply chain disruptions, and reduced consumer demand loom over the energy sector.
With Permian growth hanging in the balance, the US oil industry faces a pivotal test of resilience in the face of unprecedented trade and economic headwinds.
