President Trump has reportedly homed in on $50 a barrel as the price he’d like to see US oil prices trend toward, alleviating energy costs for US households.
The problem for the US oil industry? That math doesn’t check out.
In the Permian Basin, the largest collection of oil plays in the continental US and the crown jewel of American energy, breakeven prices hover between $62 and $64, according to data from the Dallas Federal Reserve.
With the price of WTI crude oil (CL=F), the US benchmark, around $57 today, this means, at a basic level, that barrels extracted by US oil companies on US soil are not being sold for more than it costs to drill for them.
“Capital efficiencies and returns drive our investment decisions,” one respondent told the Dallas Fed’s most recent quarterly energy survey. “If economic conditions worsen, drilling and completion activities will cease in 2026.”
As a wave of global oversupply gluts the oil market, the Energy Information Administration expects that Brent crude (BZ=F) — the international benchmark — will fall toward an average of $55 per barrel within the first quarter of 2026 and remain at that depressed level throughout the year.
WTI prices would almost certainly move in tandem, pegging its value around $51.50.
This is likely good news for Trump, especially as affordability has stepped in as the leading issue for voters ahead of the midterm elections.
The national average price for gas in the US on Thursday was $2.81 per gallon, according to AAA data, about $0.25 lower than a year ago and the lowest level since March 2021.
As for Trump’s plans for the industry, the question is more complicated.
Read more: Find the best credit cards for buying gas
In May, when oil was trading at around the same levels it is today, Travis Stice, executive chair of Diamondback Energy (FANG), an independent exploration and production firm, said the industry was already looking over the edge of a cliff.
“There have only been two quarters since 2004 where [oil prices] have been as cheap as they are today,” excluding 2020’s anomaly, Stice wrote in a letter to shareholders. “Therefore, we believe we are at a tipping point for U.S. oil production at current commodity prices.”
Even the oil majors — ExxonMobil (XOM), Chevron (CVX), and ConocoPhillips (COP) — which are often able to maintain higher breakeven marks due to their scale and multiple business lines through the energy supply chain, are starting to feel the heat.
Exxon and Chevron have both pegged their global breakeven targets for 2030 at around $30 a barrel. That’s well below today’s prices but, given current trends, becoming increasingly close.
And in its latest outlook, ExxonMobil raised its 2030 expectations for both earnings and cash flow growth, a key metric for companies focused on steady dividends, by $5 billion each, assuming oil held at “constant prices.”
But the company, led by CEO Darren Woods, announced on Wednesday that the slump in oil prices will reduce its fourth quarter results by anywhere from $800 million to $1.2 billion, in a sign that depressed prices are already hitting the industry’s bottom line.
This is all coming as the oil market is facing a massive wave of oversupply. The member nations of the Organization of Petroleum Exporting Countries (OPEC) spent much of 2025 rolling back production cuts and adding more barrels to the market, with producers in the Americas doing much of the same.
Goldman Sachs commodities strategists are forecasting prices for Brent and WTI this year at $56 and $52, respectively, under the bank’s base case, just slightly more bullish than the EIA’s predictions. JPMorgan sees Brent at $58 and WTI at $54.
“At the risk of flogging a very dead horse, our message to the market has remained consistent since June 2023,” JPMorgan strategists wrote. “While demand is robust, supply is simply too abundant.”
Responding to the Dallas Fed’s third quarter survey, a respondent at an exploration and production firm said that with the administration “pushing for $40 per barrel crude oil … drilling is going to disappear.”
“The oil industry is once again going to lose valuable employees,” the respondent said.
In Venezuela, where Trump is hoping to entice US operators to reenter the country and spend billions of dollars to kick-start its oil industry, breakeven prices are even higher than in the US, averaging more than $80 per barrel in the country’s leading Orinoco Belt, according to Reuters.
It’s not all doom and gloom, as strategists predict prices to rise in 2027 and 2028 — Goldman Sachs sees Brent and WTI rising to $80 and $76 per barrel, respectively, by 2028 — as the market course-corrects to address oversupply.
But until then, the president’s pursuit of lower oil prices is likely to be a tough pill to swallow for the US energy industry, even if American consumers get lower prices for gasoline at the pump.
“The drumbeat that gasoline and crude oil prices are too high and inflationary fails to address the very small impact on consumers as well as the reality of the last 20 years’ real prices,” another Dallas Fed respondent said.
“Despite all of this, actual industry costs continue in one direction: up.”
Jake Conley is a breaking news reporter covering US equities for Yahoo Finance. Follow him on X at @byjakeconley or email him at jake.conley@yahooinc.com.
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