Key Points
- President Trump’s target of $50 a barrel for U.S. oil is below the breakeven price for many American drillers.
- The breakeven price in the Permian Basin is between $62 and $64 a barrel.
- A global oversupply of oil is expected to push prices down to around Trump’s target in early 2026.
- Even major oil companies like ExxonMobil are seeing their profits hit by the slump in prices.
President Trump reportedly wants U.S. oil prices to hover around $50 a barrel, a move that would be great for American consumers at the gas pump. The problem? For the U.S. oil industry, that price is a recipe for disaster.
In the Permian Basin, the heart of America’s oil production, it costs companies between $62 and $64 just to break even on a barrel of oil. With the current price of U.S. crude sitting around $57, many companies are already losing money on every barrel they pump. If prices fall to Trump’s target, a lot of them might have to stop drilling altogether.
“If economic conditions worsen, drilling and completion activities will cease in 2026,” one executive told the Dallas Federal Reserve in a recent survey.
The global oil market is currently flooded with a massive oversupply. OPEC has been rolling back production cuts, and countries like Brazil and the U.S. itself are pumping at record levels.
The U.S. Energy Information Administration expects this surplus to push prices down to around $55 for Brent crude, the international benchmark, in the first quarter of 2026. That would put U.S. prices right around $51.50, just a hair above Trump’s goal.
While this is good news for voters heading into the midterm elections, it’s putting a huge strain on the oil industry. Even the giants like ExxonMobil and Chevron are starting to feel the heat. Exxon recently announced that the slump in oil prices will cut its fourth-quarter results by up to $1.2 billion.
The irony is that Trump is also trying to get U.S. oil companies to invest billions in revitalizing Venezuela’s oil industry, where the breakeven prices are even higher, averaging over $80 a barrel. It’s a classic case of a president trying to have it both ways: low prices for consumers and big profits for the industry.
For now, it seems like the consumers are winning, but the long-term health of the U.S. oil patch is looking increasingly shaky.
