WTI oil price dropped below $60 per barrel, hitting its lowest point since 2021. Let Domestic Drilling and Operating help you invest in oil and gas working interest today. Energy giants like ExxonMobil, Chevron, Shell, BP, and TotalEnergies continue their normal operations after Q1 earnings reports, despite this sharp decline. Chevron’s resilience stands out as it projects $9 billion in incremental free cash flow at current prices, even with WTI crude’s dramatic dip.

Market concerns about OPEC+’s potential production increase of 411,000 barrels per day for July have pushed Brent futures down to $64.34 a barrel. Companies like Domestic Drilling and Operating must direct their way through these challenging times as crude oil prices face downward pressure. U.S. crude inventories have risen unexpectedly by 1.3 million barrels to 443.2 million barrels. This stands in stark comparison to analysts’ predictions of a drawdown.

Oil prices staying at or below $60 for a long time would force major adjustments throughout the industry. Shell’s consistent buyback program has run for 14 straight quarters at $3 billion or more, but this strategy might need revision. BP has cut its quarterly share buyback program by $1 billion already, following disappointing earnings and higher net debt.

Oil Price Falls Below $60 After Q1 Earnings Season

Oil markets told two different stories in 2025’s first quarter. Companies posted strong earnings before prices took a nosedive. Major oil companies released solid financial results for Q1 right before crude prices fell below the crucial $60 mark in April.

Q1 results show strength before April downturn

Big energy companies showed remarkable resilience in their first-quarter performance despite early warning signs of weakening prices. Aramco reported $31.90 billion in net income and managed to keep strong cash flow from operating activities at $39.60 billion. Their earnings dropped from $39.50 billion in Q1 2022, but the company’s free cash flow stayed stable at $30.90 billion.

Exxon Mobil delivered “industry-leading” earnings of $7.70 billion, which was about $500 million less than their 2024 first-quarter results. Chevron’s earnings came in at $3.50 billion, much lower than the $5.50 billion from first quarter 2024.

Lower crude prices caused the drop in earnings during Q1. Petrobras reported that oil’s average sales price dropped 9.1% to $75.66 per barrel from January to March compared to last year. Notwithstanding that, the sector managed to keep strong operational metrics before steeper price drops hit in April and May.

WTI crude oil price chart shows steep decline

WTI crude prices fell sharply after Q1 earnings season. Starting at $75.74 in January 2025, WTI prices dropped steadily to $71.53 in February and fell further to $68.24 in March, before hitting $63.54 in April. WTI reached $63.43 per barrel by June 3, 2025, an 11.74% drop for the year.

These numbers mark WTI’s lowest point since December 2021. Prices fell faster in April as economic worries grew. U.S. GDP shrank 0.3% in Q1 2025 according to the U.S. Bureau of Economic Analysis—the first economic decline since Q1 2022. This economic slowdown pushed oil prices down because slower economic activity reduces oil demand.

Brent oil price WTI comparison expresses global trend

WTI and Brent crude prices give us a clear picture of global oil market dynamics. Brent trades at $65.39 per barrel, about $2 higher than WTI—this gap points to ongoing global market complexities.

Several factors separate these two measures:

• Geography and transportation: U.S. producers make WTI in landlocked areas and settle it in Cushing, Oklahoma. Storage stays fixed there and moving oil to other facilities costs more. Brent comes from the North Sea and moves easily to ships for temporary storage.
• Geopolitical sensitivity: International tensions and supply disruptions affect Brent more. During the Arab Spring in 2011, Brent hit $126.65 while WTI reached $112.79.
• Trade and export implications: America’s economy feels this price gap differently now. The U.S. exports about 2.3 million barrels daily, unlike 2005 when it imported 12.5 million barrels each day. So falling oil prices now hurt the U.S. trade deficit instead of helping it.

Both benchmarks falling together suggests a fundamental change in how the global oil market feels rather than local issues. Market experts blame this widespread weakness on worries about future economic growth, which sends a concerning signal about the broader economy.

Energy Giants Reaffirm Commitment to Shareholders

Major energy companies stand firm in their promises to shareholders despite falling WTI crude oil prices. Recent first-quarter earnings reports from industry giants show they’re determined to keep shareholder returns even as market conditions get worse.

ExxonMobil and Chevron manage to keep dividend strategies

Exxon Mobil and Chevron still make dividend payments their top priority despite oil price swings. Chevron gives investors a 4.04% yield, which beats Exxon Mobil’s 3.36%. These yields are a big deal as it means that they’re higher than PCE inflation rates. Chevron’s dividend growth has been impressive. The company raised its quarterly dividend by 26.3% from May 2020 to May 2024. Exxon Mobil grew more slowly at 9.2% during this time.

Chevron’s financial muscle shows in its free cash flow, which hit USD 20.40 billion in 2023. This amount was 79% more than what it paid in dividends in the last year. Exxon looks even stronger with USD 33.45 billion in free cash flow last year, beating its USD 14.93 billion dividend payments by 124%. Chevron gave back nearly USD 7.00 billion to stockholders in Q1 but will reduce this amount next quarter.

Shell and BP focus on long-term capital discipline

Shell keeps its investor-friendly approach going with its 14th straight quarter of USD 3.00 billion or more in buybacks. The company started another USD 3.50 billion buyback after beating earnings expectations in the first quarter. CEO Wael Sawan puts disciplined capital use first and wants to generate USD 10.00 billion in yearly free cash flow.

BP cut its quarterly share buybacks by USD 1.00 billion after weak earnings reports, lower cash flow, and rising net debt in the first quarter. BP’s Board still promises to give back 80% of extra cash to shareholders. Analysts think BP might need to cut yearly buybacks by 70% in 2026 compared to 2024 if oil stays at USD 60.00 per barrel.

TotalEnergies outlines cost-cutting and efficiency plans

TotalEnergies sticks to its shareholder return policies while cutting costs. The company’s Board confirms it will return over 40% of cash flow to shareholders through dividends and buybacks across market cycles. On top of that, TotalEnergies will do USD 8.00 billion in share buybacks this year and expects to return more than 45% of 2024 cash flow.

TotalEnergies plans to buy back USD 2.00 billion in shares each quarter in 2025 “assuming reasonable market conditions.” The company will raise dividends by at least 5% based on 2024 buybacks. The company promises to save more than USD 1.00 billion in costs by 2023 compared to 2020. TotalEnergies wants to grow its combined energy production by 30% from now until 2030, splitting growth between electricity and LNG.

Executives Say Domestic Operating Models Are Resilient

Oil executives remain confident about their domestic operations even as WTI oil prices fall below $60 per barrel. They credit their success to efficient operations and strong positions in key production areas that help them stay profitable despite market swings.

Permian Basin and Guyana output boost Exxon’s confidence

Exxon’s leaders point to their strategic assets in the Permian Basin and Guyana as their main source of financial strength. The company’s upstream earnings reached $6.80 billion in Q1 2025, which is $1.10 billion more than last year. This growth came from increased production in these regions and cost savings.

Production numbers tell an impressive story. Exxon’s net output rose by 20% to 4.6 million oil-equivalent barrels daily, largely because of the Pioneer acquisition in the Permian. The company’s Permian supply costs stay under $35 per barrel, which gives them plenty of room to handle current prices.

“In this uncertain market, our shareholders can be confident in knowing that we’re built for this,” said Darren Woods, Exxon’s CEO. “The work we’ve done to transform our company over the last eight years positions us to excel in any environment”.

Chevron projects $9B free cash flow at $60 oil

Chevron expects about $9 billion in free cash flow at $60 Brent oil prices, showing they can handle today’s market conditions well. Their financial outlook suggests they’ll stay profitable at various price points.

Wood Mackenzie estimates show Chevron has the industry’s lowest breakeven level for its base business at around $30 a barrel this year. This means they can weather long periods of lower oil prices and still generate substantial cash.

Domestic drilling and operating costs remain low

Big and small producers face different cost challenges. Companies producing more than 10,000 barrels daily spend about production costs of $26 per barrel, while smaller operators pay much more at $44 per barrel.

Large operators can make money in all major shale plays. Their costs range from $31 per barrel in the Delaware Basin to $38 in the Midland Basin. Small companies find it harder to handle price changes.

Some smaller producers have started cutting back. Diamondback Energy, one of the Permian’s biggest oil producers, reduced its yearly spending plan by 10%. They believe U.S. oil production has peaked. America still leads global oil production with more than 13 million barrels daily.

Analysts Warn of Risks if Prices Stay Low

Financial analysts warn about industry risks as oil price WTI stays near $60. This price point represents a vital threshold that might force production cuts in U.S. shale regions.

Break-even points vary across shale regions

The Dallas Fed Energy Survey shows break-even costs to drill new wells profitably range between $60-$64 per barrel. These prices match or exceed current market values, which creates a risky situation for producers. Large operators can break even at $58 per barrel, while smaller companies need $67 per barrel to stay profitable. This price gap explains why many companies have merged lately.

Each major basin has its own economics. The Permian Midland Basin needs about $62 per barrel, and the Delaware Basin requires $64 per barrel for new drilling. A 2025 survey reveals existing wells can make money at much lower prices—some as low as $33 per barrel.

Rigs may drop if crude oil prices remain under pressure

Drilling activity shows the effects already. The U.S. active oil and gas rig count dropped by 3 to 563, marking the fifth straight week of decline. This number stands as the lowest since November 2021, with 37 fewer rigs than last year.

Wood Mackenzie’s analysts expect U.S. Lower 48 oil output to fall by about 37,000 barrels per day year-over-year in 2026. The situation could worsen if oil prices drop to $50 per barrel, putting 1.2 million barrels per day at risk by 2026.

How much gasoline does a barrel of oil make becomes critical for margins

Refinery economics have weakened too. U.S. refineries typically get 19-20 gallons of gasoline and 11-12 gallons of diesel from each 42-gallon barrel. These production ratios matter more as refinery margins get tighter.

The 3:2:1 crack spread—the difference between the price of 3 barrels of crude and the price of 2 barrels of gasoline plus 1 barrel of distillate—has dipped below five-year averages. Some refiners have shut down as a result. Valero’s Benicia facility and Phillips 66’s Los Angeles refinery have closed their doors.

Mergers and Acquisitions Aim to Weather Volatility

Energy sector merger and acquisition activity hit nearly $400 billion in 2023, which is 50% higher than 2022 levels. Major producers drove this dealmaking surge to find stability amid dramatic oil price wti fluctuations and get ready for what’s ahead.

Exxon’s Pioneer deal adds 16B barrels of oil equivalent

ExxonMobil bought Pioneer Natural Resources for about $60 billion, making it the biggest U.S. shale deal ever reported. The company combined Pioneer’s 850,000 net acres in the Midland Basin with its own 570,000 net acres in the Delaware and Midland Basins. These combined holdings created an estimated 16 billion barrels of oil equivalent resource in the Permian, which gave ExxonMobil’s domestic portfolio a big boost.

The deal doubled ExxonMobil’s Permian production to 1.3 million barrels of oil equivalent per day, and they expect to reach about 2 million barrels daily by 2027. Pioneer’s assets should supply oil at less than $35 per barrel, which helps protect against today’s unstable prices.

Chevron’s Hess acquisition strengthens Guyana position

Chevron bought Hess Corporation in a $53 billion all-stock deal with a total value of $60 billion including debt. Unlike ExxonMobil’s focus on domestic assets, Chevron wanted access to the Stabroek Block off Guyana’s coast—the largest oil find in the last decade.

This smart move gave Chevron a 30% stake in the Stabroek Block, with more than 11 billion barrels of oil equivalent in recoverable resources. Guyana’s assets are a great chance to get high-margin production, which matters even more since Chevron’s reserve replacement ratio dropped to -4% in 2024.

Consolidation seen as hedge against depletion and price swings

Companies are joining forces to protect themselves from resource depletion and market swings. Oil and gas exploration companies now struggle to find high-quality drilling spots. Money is harder to come by as traditional lenders and private equity firms step back from the sector.

These mergers help companies optimize through economies of scale and streamlined production facilities. Oil demand doesn’t need to grow for these deals to work financially—ExxonMobil and Chevron’s calculations showed these acquisitions would stay viable even if demand fell.

The Future of Oil Markets Amid Price Uncertainty

WTI crude prices hover near $60, and the energy world shows both challenges and resilience. Big oil companies have shown remarkable ability to adapt while facing their lowest prices since 2021. Oil prices have dropped sharply, yet financial fundamentals of industry leaders stay surprisingly strong. Chevron expects $9 billion in free cash flow at current prices, while ExxonMobil utilizes its strategic Permian and Guyana assets to stay profitable.

Large and small producers show a growing gap between them. Major operators can break even at $30-35 per barrel and remain stable, but smaller companies need $67 per barrel to justify new drilling. Without doubt, this explains why companies are merging, as seen in ExxonMobil’s $60 billion Pioneer buyout and Chevron’s $53 billion Hess purchase.

Current price levels might be temporary or become the new normal, depending on several key factors. OPEC+ production choices will affect global supply balances by a lot. Economic growth worries could weaken demand forecasts further. And the efficiency benefits from recent mergers might alter competitive dynamics in the industry.

This uncertain time requires careful analysis by investors and industry players. Major companies keep their promises to shareholders now, but sustained prices below $60 would force tough choices about spending money. The oil industry has faced many cycles before and has always shown it knows how to adapt and evolve when markets get tough.

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