US Frackers Face New Threat as Trump Pursues Venezuelan Dream
The United States is already grappling with an oversupply of oil, and the latest development could make things worse. President Donald Trump's plan to capture Venezuela's President Nicolás Maduro and his wife, Cilia Flores, has sent shockwaves through the US shale-oil industry.
Industry insiders warn that the impending arrival of Venezuelan crude oil will exacerbate the global glut, leading to lower oil prices and higher production costs for US producers. With average production levels of 13.6 million barrels a day, the US is already the world's largest crude-oil producer, accounting for 64% of total US crude oil production.
However, Venezuela's potential output could further flood the market, putting pressure on US suppliers. While it will take years for Venezuela's production to ramp up, Trump's eagerness to press ahead with his plan may not be in line with industry experts' predictions.
"The economics of US oil production are troublesome at current prices," notes Rob Haworth, senior investment strategy director at US Bank Asset Management Group. "The Federal Reserve Bank of Dallas estimates that break-even prices for existing wells range between $26 and $45 a barrel."
For the shale-oil industry, which has already struggled with lower oil prices, the threat is even more daunting. Producers' balance sheets were already weighed down by debt during the Covid-19 pandemic, leading to consolidation in the industry.
"The overall long-term implication is it's definitely negative for the...run-of-the-mill frackers," warns Mark Malek, chief investment officer at Siebert Financial. "You're going to see more supply, and that supply is clearly going to put pressure on the fracking industry."
Industry experts predict that companies will keep output flat in 2026, with production potentially peaking. Capital expenditures have already decreased by 40% from their peak in 2014, and technological improvements are not enough to offset declining oil prices.
"The lack of reinvestment is eventually going to catch up with you," notes Stewart Glickman, director of fundamental research at CFRA Research. "There's a lot of moving parts, and now you add Venezuela on top, and the longer-term risk."
As US frackers face this new threat, one thing is clear: the global oil supply glut is becoming increasingly complex, and the stakes for the shale-oil industry have never been higher.
The United States is already grappling with an oversupply of oil, and the latest development could make things worse. President Donald Trump's plan to capture Venezuela's President Nicolás Maduro and his wife, Cilia Flores, has sent shockwaves through the US shale-oil industry.
Industry insiders warn that the impending arrival of Venezuelan crude oil will exacerbate the global glut, leading to lower oil prices and higher production costs for US producers. With average production levels of 13.6 million barrels a day, the US is already the world's largest crude-oil producer, accounting for 64% of total US crude oil production.
However, Venezuela's potential output could further flood the market, putting pressure on US suppliers. While it will take years for Venezuela's production to ramp up, Trump's eagerness to press ahead with his plan may not be in line with industry experts' predictions.
"The economics of US oil production are troublesome at current prices," notes Rob Haworth, senior investment strategy director at US Bank Asset Management Group. "The Federal Reserve Bank of Dallas estimates that break-even prices for existing wells range between $26 and $45 a barrel."
For the shale-oil industry, which has already struggled with lower oil prices, the threat is even more daunting. Producers' balance sheets were already weighed down by debt during the Covid-19 pandemic, leading to consolidation in the industry.
"The overall long-term implication is it's definitely negative for the...run-of-the-mill frackers," warns Mark Malek, chief investment officer at Siebert Financial. "You're going to see more supply, and that supply is clearly going to put pressure on the fracking industry."
Industry experts predict that companies will keep output flat in 2026, with production potentially peaking. Capital expenditures have already decreased by 40% from their peak in 2014, and technological improvements are not enough to offset declining oil prices.
"The lack of reinvestment is eventually going to catch up with you," notes Stewart Glickman, director of fundamental research at CFRA Research. "There's a lot of moving parts, and now you add Venezuela on top, and the longer-term risk."
As US frackers face this new threat, one thing is clear: the global oil supply glut is becoming increasingly complex, and the stakes for the shale-oil industry have never been higher.
Trump's plan to capture Venezuela's leaders could be a disaster for US frackers, already struggling with low prices 
. More oil on the market = lower profits & even more debt issues 
. They should just focus on improving efficiency instead of trying to dominate Venezuela 
. Trump's plan to capture Maduro and his wife? Sounds like a classic case of playing hardball on the world stage 
. The US shale-oil industry is already struggling with low oil prices, and now we're talking about a whole new wave of supply coming in from Venezuela? It's like throwing gasoline on a fire 
.
. I mean, what exactly do they think will happen if they manage to capture Maduro and his wife? Are we going to just magically solve all our energy problems overnight? 
It's time for some level-headed thinking in Washington 
.
. Plus, I think some of these experts are being way too harsh on Trump's plan 
. It's not like he's gonna magically solve all our energy problems overnight 
️. Give the guy some credit for thinking outside the box, you know? 
i was already worried about the oil prices getting lower, but now with venezuela joining the mix it's like a whole new level of trouble for the frackers 
they're already struggling with debt and consolidation, adding venezuela to the mix is just gonna make things worse 
what's the plan here? are we gonna see even more companies shutting down or merging? 
omg what a game changer for the fracking industry! i mean think about it... trump's plan to take venezuela over could be the ultimate death sentence for those struggling frackers 
. The global oil supply glut is bad enough without throwing Venezuela into the mix 
. I'm curious to see how it all plays out, but one thing's for sure: the US shale-oil industry is about to get a whole lot more interesting 
. Industry experts are warning of consolidation, reduced production, and stagnant capital expenditures - yikes!