Oil & Gas Support Services NAICS 213112

May 27, 2025 - Drillers Hit the Brakes

• After posting a modest increase this year, US oil production is expected to decline in 2026, the first year-on-year decrease in roughly a decade (excluding 2020), The Wall Street Journal reported in May. Drillers are hitting the brakes on production in response to low crude oil prices and pressure to return cash to shareholders, according to WSJ. Diamondback Energy, one the nation’s largest producers, recently told investors that it would spend less this year and lower rig counts. Low crude prices due to falling demand and OPEC+’s decision to pump more oil are roiling the US oil patch, most notably the oil-rich Permian Basin. Oil prices have fallen since President Trump’s early April tariff offensive – far below the $85 per barrel price needed to encourage companies to drill, the CEO of Permian driller Ring Energy told WSJ.
• Global demand for oil – a demand driver for oil and gas support services – is forecast to ease due to global trade tensions and a bigger-than-anticipated supply surplus if OPEC+ raises output beyond April, The Wall Street Journal reports citing the latest projections from the International Energy Agency (IEA). “New US tariffs will clearly act as barriers to global trade and economic growth,” the Paris-based agency said, adding “The lack of clarity due to their on-again off-again nature, combined with the potential for retaliation and escalation, has caused uncertainty to soar.” IEA lowered its demand-growth estimates for the fourth quarter of 2024 and first quarter of 2025 to around 1.2 million barrels per day (bpd). Its revised estimates see global demand growing by 1.03 million bpd versus 1.1 million bpd previously, reaching 103.9 million bpd on average, WSJ reports.

• On his first day in office President Trump declared a national energy emergency to maximize oil and gas production, speed permitting, roll back environmental protections, and withdraw the US from the 2015 Paris climate deal. But with US production at record levels, it remains to be seen if Trump’s actions will have any impact. Still, the mood in the oil and gas industry – a major customer for oil and gas support services – is optimistic, according to The American Oil & Gas Reporter. “It borders on exuberant,” described Karr Ingham, president of Texas Alliance of Energy Producers. The American Petroleum Institute, has a roadmap for the second Trump administration that includes swiftly authorizing liquified natural gas exports, expanding drilling on federal lands, making pipeline permitting easier, repealing strict vehicle emissions and fuel economy standards, and keeping current corporate tax rates in place.
• Employment by oil and gas support services shrank 4% in March compared to a year ago, while the average industry wage jumped 10% over the same period to a new high of $36.92 per hour, according to the latest US Bureau of Labor Statistics data. Falling crude oil and natural gas prices are depressing drilling activity, reducing demand for oil and gas support services. Crude oil prices generally declined in the first quarter – from $82 per barrel in mid-January to $75 per barrel on March 31 -- on concerns surrounding future economic growth, according to the US Energy Information Administration.