The outlook for U.S. shale oil is bleak, with industry warnings that oil prices may face long-term pressure

The latest survey reveals a cloud of gloom over the US energy industry. The third-quarter regional survey released recently by the Dallas Federal Reserve Bank sends a clear warning signal — from Texas and northern Louisiana to southern New Mexico, major US energy hubs are experiencing widespread pessimism among oil and natural gas industry executives.

Shale Oil Dilemma Emerges, Cost Pressures Mount

This survey, covering 139 corporate decision-makers, provides an in-depth scan of key regions in the global energy supply landscape. The interviewed executives openly acknowledge the current predicament: the US shale oil industry is on the brink of collapse, and the once-globally celebrated energy sector is now severely impacted by worsening policy environments and economic outlooks.

An industry insider bluntly states that the golden age of shale oil is over. Although US oil reserves remain abundant, the critical issue is economic viability — if the price per barrel cannot stay above $60, the entire industry faces survival challenges. This comment exposes the core pain point of the industry: the imbalance between costs and revenues is dragging down industry vitality.

Oil Price Expectations Significantly Revised Downward, Market Confidence Wavers

A more severe reality is the continuous adjustment of oil price expectations. The latest forecasts from executives show that West Texas Intermediate (WTI) shale oil prices are not optimistic — expected to only stay around $63 per barrel in 2025, and by 2027, this figure could fall below $60.

This sharply contrasts with the optimistic attitude three months ago. During the Q2 survey, the industry hoped WTI prices would surge to $68 by year-end and more optimistically expected a rebound to $70 in two years. Now, these expectations are being gradually revised downward, indicating that market confidence is waning.

Geopolitical Risks Support Oil Prices; Short-term Rebound Masks Long-term Concerns

Meanwhile, international oil prices experienced an unexpected rebound this week. NYMEX crude futures for November delivery rose by 5.3% week-over-week, and Brent crude increased by 5.2%, marking the largest weekly gain since mid-June. The main driver behind this rebound is rising geopolitical risks.

Ukraine continues to attack Russian oil facilities, and the US and Europe may further escalate sanctions against Russia, increasing supply-side uncertainties. Russian Deputy Prime Minister announced plans to implement partial diesel export bans and extend gasoline export controls by the end of the year, intensifying global oil supply tightness. At the same time, the Trump administration is pressuring allies to reduce Russian oil imports, which could alter procurement decisions in major importing countries like India and Turkey.

Responses to Russia’s airspace violations by NATO, along with variables such as Iraq’s semi-autonomous Kurdistan region restarting oil exports, add short-term volatility to the market. Natural gas prices also saw slight increases, continuing to rise on Friday.

Policy Uncertainty Fuels Industry Concerns

It is worth noting that executives are increasingly critical of the policy shifts under the Trump administration. Although policy criticism is not a new topic, analysts point out that the language in the latest survey signals an escalation of dissatisfaction. One oilfield services provider frankly states that the industry is currently suffering severe losses, and the sudden changes in the president’s steel tariffs and energy policies have become obstacles rather than catalysts for development, further undermining industry confidence in government commitments.

Overall, while short-term geopolitical risks have pushed oil prices higher, the cost challenges faced by the US shale oil industry and bleak economic prospects have become long-term issues that are difficult for the industry to overcome.