Oil executives bemoan Trump's energy policy 'chaos,' Dallas Fed survey says

U.S. oil and gas executives are increasingly pessimistic about the industry due to unfavorable trade policies and regulatory changes implemented by the Trump administration, with sentiments expressed in a Federal Reserve survey indicating significant challenges for the shale sector.

Concerns have been raised that the U.S. shale business is struggling, with declining oil prices expected, averaging around $63 per barrel by 2025, which indicates a decrease in optimism compared to earlier forecasts.

Geopolitical tensions, particularly related to the conflict in Ukraine and sanctions on Russia, are influencing crude oil prices, which have seen recent increases amid escalating global pressures and changes in export policies.

The energy market reflects notable fluctuations in stock performance, with some companies experiencing substantial gains while others face significant declines, suggesting volatility in the sector as it navigates these challenging conditions.

Recommendation Rating: Caution Advised for Oil and Gas Industry

Pessimism is increasingly prevalent among U.S. oil and gas executives, many of whom are expressing growing frustration with the trade policies and regulatory adjustments implemented by the Trump administration. This sentiment was highlighted in the latest regional survey from the Federal Reserve Bank of Dallas, conducted from September 10-18, which gauged the opinions of 139 executives in Texas, northern Louisiana, and southern New Mexico—areas that collectively produce more energy than several of the world's largest countries.

According to multiple respondents, the U.S. shale industry is facing significant challenges. "The U.S. shale business is broken," remarked one executive, emphasizing that what was once considered the leading energy sector has been hampered by adverse political conditions and economic misunderstandings. Another voiced concern, stating, "We have begun the twilight of shale. The U.S. may not be running out of oil, but it is certainly running out of oil priced at $60 per barrel.”

An executive from a support service firm added, "A robust oilfield services sector is crucial for ramping up production when needed. Unfortunately, we are currently experiencing significant losses.”

While critiques of Trump's policies have surfaced before, analysts noted a shift in tone reflecting heightened concern. Executives cited the president's steel tariffs and sudden energy policy changes as having detrimental effects on an industry that he had previously pledged to bolster. The survey anticipates a drop in West Texas Intermediate (WTI) oil prices, predicting an average of around $63 per barrel by 2025, with projections remaining in the $60 range through 2027. This marks a decrease from earlier forecasts of approximately $68 per barrel by year-end, suggesting a weaker outlook.

In recent weeks, crude oil futures have risen, driven by increased geopolitical tensions, particularly following ongoing Ukrainian attacks on Russian oil installations and the potential for further sanctions from the European Union and the U.S. According to Deputy Prime Minister Alexander Novak, Russia will impose a partial ban on diesel exports until the end of the year, alongside an extension of the pre-existing gasoline export ban.

Amid continued pressure, President Trump is urging U.S. allies to diminish their reliance on Russian oil, with Andrew Lipow of Lipow Oil Associates commenting that nations such as India and Turkey may soon reduce their imports from Russia. NATO's warnings regarding potential responses to Russian airspace violations have further escalated tensions, raising the likelihood of additional sanctions on the Russian oil sector.

In addition, crude oil exports from Iraq’s Kurdistan region are set to resume. This week, front-month Nymex crude for November delivery concluded at $65.72 per barrel, marking a significant weekly gain of 5.3%. Similarly, Brent crude for the same month settled at $70.13 per barrel, also up by 5.2%—representing the largest weekly percentage increases for both benchmarks since mid-June. Nymex October natural gas likewise rose by 0.5% to $3.206/MMBtu.

On Friday, Nymex crude, Brent crude, and U.S. natural gas saw further increases of 1.1%, 1%, and 0.3%, respectively.

In terms of exchange-traded funds (ETFs), notable mentions include USO, BNO, UCO, SCO, USL, DBO, DRIP, GUSH, USOI, UNG, BOIL, KOLD, UNL, FCG, and XLE. Energy stocks, as indicated by the Energy Select Sector SPDR Fund (XLE), rose by 3.9% over the week.

The past five days have yielded some notable fluctuations among energy and natural resources stocks, with significant gainers including:

Lithium Americas (LAC): +94.7%

Flux Power (FLUX): +47.3%

Amplify Energy (AMPY): +35.8%

American Battery Technology (ABAT): +32.7%

Fluence Energy (FLNC): +27.2%

Conversely, some stocks faced declines, such as:

Freeport-McMoRan (FCX): -20.4%

NuScale Power (SMR): -18.7%

Oklo (OKLO): -18.3%

Cosan (CSAN): -18.2%

OMS Energy Technologies (OMSE): -17.8%

Source: Barchart.com

Overall, the oil and gas sector appears to be entering a challenging phase, warranting caution and careful observation moving forward.