Oil and gas drilling permit applications in Texas, the top U.S. oil-producing state, fell to their lowest last month since February 2021, consultancy Enverus said, amid concerns that rising OPEC+ supplies and a trade war will continue to hit crude prices.
Operators in Texas submitted 570 new drilling permit applications in April, down from 795 in March and the lowest number since February 2021, according to Enverus.
“After Liberation Day we saw a response where there was a sharp decline on average, of weekly permits submitted as a result of the uncertainty of the global trade war, and you have the entire supply side from OPEC+ too,” said Mark Chapman, who leads oilfield services intelligence coverage at Enverus.
Oil prices have fallen to four-year lows since U.S. President Donald Trump unveiled an extensive list of trade tariffs on what he called Liberation Day, on April 2 against most countries last month, raising alarm bells about the potential for a recession, which in turn could crush oil demand.
Meanwhile, the Organization of the Petroleum Exporting Countries and allies (OPEC+) agreed to accelerate oil production hikes for a second consecutive month, raising output in June by 411,000 barrels per day (bpd).
In the Permian basin in New Mexico and Texas, the nation’s biggest shale oil-producing basin, drillers cut two rigs last week, bringing the total down to 287, the lowest since December 2021, according to service firm Baker Hughes.
The Permian accounts for around half of total U.S. crude production, producing 6.39 million bpd in April, according to the Energy Information Administration.
Shale producer Diamondback said on Monday it will drop three rigs in the second quarter, and could reduce activity further if oil prices fall more. Rival Coterra Energy is reducing its 2025 Permian activity by three rigs, while producer Matador Resources is dropping one drilling rig by the middle of 2025.
(Reporting by Georgina McCartney in Houston; Editing by Liz Hampton and Marguerita Choy)