‘One day chicken, one day feathers’: why US shale producers are not cheering $100 oil

{"text":[[{"start":13.43,"text":"The US war in Iran has driven global oil prices to over $100 per barrel, but independent Texas oilman David Arrington is not celebrating."}],[{"start":26.619999999999997,"text":"He is concerned about what happens in the aftermath of the supply shock, as US President Donald Trump says he wants oil at $50 a barrel or less in time for the midterm elections in November."}],[{"start":42.059999999999995,"text":"“I applaud Trump in going over there,” said Arrington about the Iran war, “what he did and why he did it; it’s for the world and for you and me.” "}],[{"start":51.86,"text":"But the 65-year-old veteran of the Permian Basin, the world’s most prolific oilfield, which pumps more than 6mn barrels a day — more than most Opec countries — had a blunt warning: “These swings really high and really low aren’t really good for anybody.” "}],[{"start":72.05,"text":"Speaking at his office in Midland, decorated with large black and white photographs by American landscape photographer Ansel Adams, Arrington predicted the price would plunge. "}],[{"start":84.47999999999999,"text":"“All the people who support Trump are capitalists and all the oil people I know are capitalistic and we want to support him,” he said, “at the same time, he’s working against us because he wants to lower the price of oil so it’s cheap gasoline forever.”"}],[{"start":null,"text":"

"}],[{"start":101.41,"text":"In Midland, the heart of America’s shale industry, the oil price rise caused by the Iran war, the highest since Russia’s invasion of Ukraine, is a temporary reprieve after a year of low crude prices, which averaged $69 in 2025. The boom times feel far away and there are not too many mariachi parties in the patch, said one Midland oil and gas consultant. "}],[{"start":128.76,"text":"Major US oil and gas companies have been cutting jobs and slashing costs, with the shale industry in particular hit hard even as production has risen. ConocoPhillips said last year it would slash up to a quarter of its workforce by the end of 2026, while there has been a wave of consolidation in the industry leading to lay-offs."}],[{"start":154.48999999999998,"text":"The potential prospect of sustained higher oil prices has been tempered by the Trump administration’s focus on affordability. Those in the oil heartland had high hopes when Trump pledged to “drill, baby, drill” and deregulate the fossil fuel industry."}],[{"start":174.36999999999998,"text":"Trump’s appointment of Chris Wright, a climate sceptic oil executive known across the shale patch, along with support from legends such as horizontal drilling pioneer Harold Hamm, a billionaire Trump donor, and another of the president’s backers, pipeline boss Kelcy Warren further raised expectations. "}],[{"start":null,"text":""}],[{"start":194.89999999999998,"text":"But his subsequent messaging has frustrated independent producers — the smaller drillers who do not have the balance sheets of an ExxonMobil or Chevron to surf through oil market gyrations so easily. They fear that, with affordability at the top of the election agenda, the price of oil could fall precipitously over the next few months. "}],[{"start":217.77999999999997,"text":"Dan Pickering, chief investment officer at Pickering Energy Partners in Houston, said that while the spot market price for oil was up 65 per cent at $99, it was only up 17 per cent for 2027 and 12 per cent for 2028. "}],[{"start":236.71999999999997,"text":"“The market is telling you this conflict is going to blow over,” said Pickering, explaining that the price is not high enough for most producers to get returns on drilling expensive wells. “You’ve got the June history with the Iran conflict, and the forward curve that are both telling you ‘let’s not rush headlong into any decisions’.” "}],[{"start":259.41999999999996,"text":"The US rig count, a business barometer for the drilling industry and its suppliers, is down 39 rigs from last year’s count of 592, with oil rigs down 75 and gas rigs up 33, according to oilfield service company Baker Hughes. Fracking crews on shale sites have also decreased, indicating that US production may be lower than forecast this year, according to analysts. "}],[{"start":285.85999999999996,"text":"“The threat of $50 oil and, you know, what Trump says he usually gets, put a cloud over the industry and so we started dialling back our plans,” said Steven Pruett, president and chief executive of Elevation Resources, an exploration and production company in Midland. "}],[{"start":null,"text":""}],[{"start":305.00999999999993,"text":"Yet the turmoil caused by the Iran war has led Pruett, a third-generation oilman, to reassess his outlook. He has accelerated negotiations to acquire rights to drill six wells at $11mn each."}],[{"start":321.9099999999999,"text":"“We’ve gone from risk off to risk on. As a mindset, I don’t think I’m alone in that,” said Pruett. “We’re going to hit the gas pedal and hope we’ll see $70 oil when the wells are on production.” "}],[{"start":336.5899999999999,"text":"Others are more cautious. Cole Harrison, 33-year-old founder of independent oil and gas company Fiesta Energy, said he was focused on increasing production from his current leases. "}],[{"start":null,"text":""}],[{"start":349.38999999999993,"text":"“You’re not going to see a huge increase on a bunch of production coming back online, it’s happened in the past, and operators have got snake bitten.” "}],[{"start":358.4799999999999,"text":"He said it was too early to start drilling fresh wells. “You need some price certainty,” he said, speaking from Fort Worth, “most guys are hedging their production to lock in $75 dollar oil”. "}],[{"start":373.0299999999999,"text":"Scott Sheffield, former chief executive of Pioneer Natural Resources which was acquired by ExxonMobil for $59.5bn in 2024, said it would take “long-term destruction” of oil facilities in the Middle East for companies to increase production. “I think people at that point in time will expand.” "}],[{"start":396.4099999999999,"text":"At an Arrington Oil & Gas drill rig just outside downtown Midland, drilling superintendent Jimmy Gray is overseeing operations. In a couple of months, wells will be producing oil from more than 2 miles below the town."}],[{"start":413.4899999999999,"text":"“This business has always been one day chicken, one day feathers, it’s a cycle,” he said about the Iran turmoil, “it just makes it more chaotic and adds instability to the market.” "}],[{"start":437.38999999999993,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1773712697_1560.mp3"}