The global oil industry is preparing to delay spending and development in response to falling crude prices and market uncertainty, according to an April 28 analysis by Wood Mackenzie.
“While the US administration targets both lower prices and ‘Drill, baby, drill’, instead what would happen is ‘Delay, baby, delay’,” wrote Fraser McKay, Head of Upstream Analysis. He explained that companies are now expected to postpone growth capital expenditure and discretionary spending to maintain financial leverage and shareholder distributions.
US Energy Agency forecasts falling oil prices and slower production by 2026 | OilNOW
The price of crude dropped below US$60 per barrel for the first time since 2021, driven by weakening demand concerns, U.S. President Trump’s tariff policies, and OPEC+ supply increases planned for May.
Oil and gas shares fell by an average of 15% between March 28 and April 8, with U.S.-focused exploration and production companies taking the largest hit.
McKay noted that despite improved balance sheet flexibility since 2021, the industry is poised to respond quickly if prices drop further, drawing on experience from the 2015 and 2020 crashes.
He added that while US$65 per barrel pressures margins, it is not yet low enough to force immediate, dramatic changes to budgets. Nonetheless, global upstream development spending is now expected to fall year-on-year for the first time since 2020.
