President Donald Trump's renewed push for aggressive oil production faces harsh economic realities at home and abroad, according to economist Paul Krugman, who said that the strategy collapses under basic profit-and-loss math.‘Drill Baby, Drill’ Is DeadIn his newsletter on Monday, Krugman said Trump returned to the White House with two major economic ideas: “tariffs and drill, baby, drill.”Krugman also highlighted Trump’s promises on the campaign trail to slash energy prices, and his inaugural address in 20 ...

Summary of the Conference Call on the Oil Services Industry Industry Overview - The report focuses on the oil services industry, specifically the period from 2000 to 2050, highlighting the evolution and future outlook of the sector [6][11]. Key Periods in the Oil Services Journey - The journey is divided into five periods: 1. The Golden Age (2000-2014) 2. The Great Disruption (2015-2024) 3. Drill, Baby Drill (2025-2029) 4. The Age of Sustainability (2030-2035) 5. The Age of Circularity (2036-2050) [11]. Core Insights and Arguments - The oil market is currently perceived as oversupplied, with a short-term supply increase peaking in early 2025, but a rapid rebalancing is anticipated in 2026 [7][9]. - A significant IEA report indicates that 90% of current oil and gas capital expenditures (capex) are for maintaining production rather than increasing it, suggesting a structural under-supply in the long term [10]. - The need for new drilling is underscored by projected decline rates of oil production, estimated at approximately 8% CAGR post-2025, necessitating new investments [15]. Investment and Capex Plans - Aramco's CFO highlighted the importance of massive investments in subsurface data acquisition and computing power, indicating a shift towards more data-driven operations [18]. - ADNOC announced a $150 billion capex plan for 2026-2030, aimed at maintaining operations and meeting growing global energy demand [25]. - Argentina's Vaca Muerta shale play is experiencing rising oil production, with production surpassing 447,000 barrels per day in March 2025, although rig counts remain historically low [20][23]. Market Dynamics and Future Projections - The report suggests that the current "Drill, Baby Drill" cycle may peak around 2028, driven by various factors including new offshore basins with low break-even prices and increasing global oil demand [29][38]. - SLB, Saipem, and Tenaris have forecasted a rebound in upstream spending in Saudi Arabia, indicating improved prospects for the oil services industry [39]. Company-Specific Insights - SLB is positioned as a key beneficiary of the improved market outlook, particularly in the Middle East, with a market share of nearly 10% in the region [39]. - Subsea 7 and Saipem are expected to create a new entity, "Saipem7," which will enhance their competitive positioning in the subsea market [44]. - Technip Energies is projected to have a record year for order intake in 2026, with several significant projects likely to be sanctioned [45]. Pricing Power and Market Conditions - The pricing power thesis for Tenaris and Vallourec remains intact, supported by tight capacity for premium tubes and rising costs [33]. - The report anticipates a gradual recovery in pricing conditions starting from the second half of 2026 as inventories clear [33]. Conclusion - The oil services industry is undergoing significant changes, with a focus on innovation, investment in technology, and a shift towards sustainability. The upcoming years are expected to bring both challenges and opportunities as companies adapt to evolving market dynamics and increasing global energy demands [11][39].

Core Theme - The U.S. shale oil industry is not primarily focused on increased drilling despite favorable regulatory conditions and support from the Trump administration [1][3]. Production Strategies - U.S. oil and gas producers are enhancing production through consolidation and efficiency improvements rather than drilling new wells, utilizing drilled but uncompleted wells (DUCs) to increase output [2][3]. - The total rig count has decreased to 546, down by 39 rigs from the previous year, indicating a decline in drilling activity [4]. Market Conditions - The U.S. benchmark oil price has fallen by approximately 15% since President Trump's inauguration, affecting producers' strategies [2]. - Industry executives suggest that if oil prices remain around $60 per barrel, the shale industry may plateau or begin to decline [5][6]. Production Outlook - U.S. oil output is projected to grow by 300,000 to 400,000 barrels per day this year, but this growth is contingent on oil prices remaining favorable [5]. - Current WTI prices have fluctuated just below or above $60 per barrel, with concerns of an impending oversupply in the market [6].