Is the oil market outlook bleak? Major U.S. energy companies warn: the shale oil industry faces severe challenges

The latest third-quarter survey released by the Dallas Federal Reserve Bank casts a shadow over the US energy market. The survey was conducted in mid-September across major energy hubs in Texas, northern Louisiana, and southern New Mexico, interviewing 139 business leaders. The oil production scale in these regions rivals that of several major global producers.

Energy Executives’ Attitudes Reverse, Industry Confidence Hits Rock Bottom

The results reflect a growing pessimism among leaders in the US oil and natural gas industry. Several senior executives openly stated that the US shale oil industry is in a crisis stage. Once considered the most competitive energy sector globally, it is now struggling due to deteriorating policy environments and economic pressures. An industry insider further pointed out that the peak of shale oil has passed; despite ample US oil reserves, maintaining industry vitality under current oil prices is difficult.

Executives’ criticisms of environmental policies are becoming more pointed. While complaints about government decisions are not new, analysts note that the comments in this survey clearly reflect an increased sense of disappointment within the industry. Most respondents believe that recent policy changes have not supported the energy sector as promised but have instead created new development obstacles. Leaders in oil and gas services also indicated that current industry losses are severe, and increasing production would require a well-developed upstream and downstream ecosystem, which the current situation makes disappointing.

Oil Price Outlook Significantly Revised Downward, Investment Prospects Dim

The most notable market concern is the significant adjustment in energy companies’ expectations for oil prices. Surveyed executives estimate that West Texas Intermediate (WTI) crude oil will fall to around $63 per barrel by 2025, and may even drop below $60 in 2027. This sharply contrasts with the optimistic outlook in the Q2 survey—at that time, senior executives generally believed WTI could reach $68 by the end of the year and return to $70 within two years. Now, confidence has clearly waned.

Geopolitical Factors Push Up Oil Prices, Short-term Variables Exist

Despite the bleak industry outlook, recent international oil prices have risen against the trend. Ongoing attacks by Ukraine on Russian oil facilities, coupled with potential new sanctions from the US and Europe, have significantly increased geopolitical risk premiums. Russian Deputy Prime Minister announced restrictions on some diesel exports and extended gasoline export bans, further tightening global supply.

The Trump administration has exerted pressure on allies to reduce Russian oil imports, which could alter procurement plans in major importing countries like India and Turkey. Meanwhile, NATO has indicated it will respond to possible Russian airspace violations, further escalating tensions. This week, NYMEX crude oil futures rose by 5.3%, and Brent crude increased by 5.2%, marking the largest weekly gain since mid-June; natural gas prices also rose, reflecting market volatility.

The long-term outlook for the shale oil industry contrasts sharply with short-term oil price fluctuations—while geopolitical factors temporarily support prices, energy executives continue to revise down their expectations for the coming years, and structural industry challenges are unlikely to be resolved in the short term.