The world’s biggest oil and gas companies are shifting from aggressive drilling to caution, as tumbling crude prices force executives to slash costs and jobs while shelving projects.
The move marks the industry’s deepest pullback since the market collapse triggered by the coronavirus in 2020, with the players once again bracing for a prolonged downturn.
Across the globe, thousands of workers are losing their jobs, investments are being trimmed, and debt levels are climbing back to pre-2022 highs.
From the shale fields of Texas to the offices of London and Kuala Lumpur, the message is clear: oil’s boom cycle has ended, at least for now.
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Chevron, British Petroleum, and ConocoPhillips have all announced sweeping job cuts in recent months. Chevron is eliminating as many as 8,000 roles, while BP said in January it would cut 4,700 staff as part of efforts to improve shareholder returns. ConocoPhillips is preparing to shed up to 3,250 workers, one in four of its workforce, before Christmas, in the sharpest sign of the sector’s human toll.
“We’ve gone from ‘drill, baby, drill’ to ‘wait, baby wait’ here in the Permian,” Kirk Edwards, Latigo Petroleum chief executive, told Reuters. Edwards separately told the Financial Times that the job cuts in the shale patch were “a flashing red warning light for the entire US oil and gas industry.”
Even state-owned giants are feeling the pressure. Saudi Aramco, the world’s largest producer, has sold a $10 billion stake in a pipeline network to raise cash. Malaysia’s Petronas is axing 5,000 jobs.
The price squeeze
Crude prices have halved from the highs reached after Russia’s invasion of Ukraine in 2022.
Brent, the international benchmark, traded just under $66 a barrel last Monday, with Wood Mackenzie forecasting it could fall below $60 in early 2026 and remain subdued for years unless geopolitical shocks disrupt supply.
OPEC+, the cartel of producers led by Saudi Arabia and Russia, has compounded the price slump by reversing its post-pandemic production restraint. Instead of defending higher prices, the group is pumping more oil to regain market share and squeeze higher-cost rivals, particularly US shale drillers.
At below $60 a barrel, none of the big Western oil companies can cover both their investment programmes and the hefty dividends and share buybacks demanded by investors.
Analysts at Morgan Stanley expect buyback cuts in the months ahead. BP has already trimmed its programme, and borrowing is rising again after years of debt reduction during the 2022–23 boom.
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Investment freeze
Capital spending on oil and gas production is expected to fall by 4.3 percent this year to $341.9 billion, the first annual decline since 2020, according to Wood Mackenzie.
In the US, the Energy Information Administration (EIA) forecasts production will drop in 2025, the first fall since 2021, as companies scale back drilling.
For shale drillers, the economics is punishing. The Dallas Federal Reserve estimates producers need $65 oil to break even, above current prices and far higher than Middle Eastern producers, who can profit at much lower levels.
“Domestic oil producers are finding it hard to make a case to maintain drilling and capital expenditure due to rising costs from tariffs and weak prices from OPEC production increases,” said Roe Patterson, managing director at Marauder Capital, a private equity investor in the sector.
“The problem is that our domestic oil production may not be there when the country needs it in the future.”
Technology, outsourcing
In response, companies are leaning on outsourcing and automation to cut costs. Administrative, accounting and even engineering jobs are being relocated to lower-cost countries such as India. Artificial intelligence is playing a bigger role in asset management and operations.
“AI is giving operators new ways to optimise in a challenging market,” said Andrew Gillick, who works in an energy data company, Enverus. “There will be more to come.”
Yet these measures cannot fully offset the effect of low prices. ExxonMobil is viewed as the best positioned among the oil majors, thanks to its low debt and strong free cash flows, more than $14 billion in the first half (H1) of 2025. But even Exxon faces pressure to scale back capital spending and return more cash to shareholders.
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Warning lights for the future
The cutbacks highlight the fragility of the oil sector’s recovery since the pandemic. While the 2022 surge in prices allowed companies to pay down debt and reward investors, that boom is fading. With prices sliding and OPEC intent on defending market share, executives are being forced into defensive mode once again.
Mike Wirth, Chevron’s chief executive, said recently that restructuring was necessary to remain competitive. “The way we protect the most jobs for the most people is by remaining competitive,” he told staff. “We have to take control of our own future.”
But for the thousands of workers in Texas, Scotland or Kuala Lumpur facing redundancy, the message offers little comfort. “The industry is facing a reckoning,” said Edwards. “These job losses are a signal of much deeper problems.”
Outlook
Analysts warn that the sector may be in for several years of subdued prices and cautious investment. If Wood Mackenzie’s forecasts hold, oil could remain below $60 a barrel for years. That level would erode cash flows, hinder exploration spending and delay major projects.
The consequences may extend beyond the companies themselves. Countries reliant on oil revenues, from Nigeria to Venezuela, face renewed fiscal strain. In the US, the slowdown threatens thousands of service sector jobs that depend on the shale industry’s supply chain.
Some executives argue that the industry’s defensive turn could ultimately set the stage for another supply crunch in the future. With investment curtailed, production growth may stall, leaving the world vulnerable to price spikes if demand rebounds unexpectedly.
“By holding back now, companies risk being unprepared for the next upturn,” Patterson of Marauder Capital said. “But right now, the economics don’t justify drilling.”
