Texas oil drilling applications at 4-year low as producers consider OPEC+ increase, trade war

Enverus, a consultancy, said that oil and gas drilling permits in Texas, which is the leading U.S. state for oil production, dropped to their lowest level since February 2021. This was due to concerns about rising OPEC+ supply and a trade conflict continuing to impact crude prices.

Enverus reports that operators in Texas filed 570 new drilling permits in April, down from the 795 applications submitted in March, and the lowest number of new permits since February 2021.

Mark Chapman who heads up Enverus' oilfield services intelligence, said that after Liberation Day, there was a decline in the number of permits issued on a weekly basis. This is due to the uncertainty caused by the global trade conflict.

Since U.S. president Donald Trump announced a list of trade tariffs against the majority of countries on Liberation Day (April 2) last month, oil prices have dropped to four-year lows. This has raised alarms about a possible recession that could lead to a drop in demand for oil.

OPEC+, the Organization of Petroleum Exporting Countries, and its allies, agreed to increase oil production for a second month in a row, increasing output by 411,000 barrels / day (bpd) in June.

The Permian Basin in New Mexico, Texas and Oklahoma is the largest shale-oil producing basin in the United States.

drillers cut

Baker Hughes, a service company, reported that two drilling rigs were lost last week. This brings the total to 287 - the lowest level since December 2021.

According to the Energy Information Administration, Permian crude oil production accounted for approximately half of all U.S. crude oil production in April. This equated to 6.39 million barrels per day.

Diamondback, a Shale producer, announced on Monday that it would reduce its activity by three rigs during the second quarter. If oil prices continue to fall further, Diamondback could reduce their activities even more. Coterra Energy, a rival company, is cutting its Permian activity in 2025 by three rigs. Matador Resources will drop one drilling rig before the middle of 2025. (Reporting and editing by Liz Hampton, Marguerita Choy, and Georgina McCartney from Houston)

(source: Reuters)