ByCharles Kennedy– Apr 07, 2025, 2:00 PM CDT
Diamondback Energy, Inc. (NASDAQ: FANG) President Kaes Van’t Hof is demanding answers from the Trump administration as to how he plans to balance the economic destruction of tariffs with a stated plan to increase American shale output.
Van’t Hof took to social media to publicly call for clarification from the White House, suggesting that the shale industry’s contribution to the U.S. economy and its status as a global oil powerhouse deserves to know what the risk is.
For America’s shale producers, it’s been a highly volatile and uncertain year where it’s difficult to see which end is up. The industry has been busy making multi-billion-dollar acquisitions in order to consolidate and take advantage of what was perceived as a seismic federal policy on oil–one that would benefit shale tremendously.
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But so far, it’s been a double-edged sword. At the same time, Trump’s sweeping tariffs, creating panic over a slump in oil demand and a global economic downturn.
For shale producers who might have jumped the gun on optimism, the stakes are now higher than before. Just in February, Diamondback cut a ~$4-billion deal to acquire Double Eagle IV Midco, increasing its footprint in the Midland Basin and the Permian.
Experts caution that the persistent uncertainties surrounding global trade, along with OPEC+’s production strategies, have the potential to destabilize international markets even more.
If the intensifying global trade dispute, launched by Trump’s tariffs, continues for any significant length of time, analysts fear we would be looking at an economic downturn that would crimp demand and put more downward pressure on prices.
Tariffs will take effect later this week, with JPMorgan warning that it will “likely push the U.S. and possibly global economy into recession this year”. JPMorgan now has the odds of a recession this year at 60%, an upgrade from its earlier projection of a 40% chance of recession.
On Monday at 3:03 p.m. ET, Brent crude was trading at $64.41, just four dollars more than the average break-even price for some in the American shale patch, CNBC quoted Carlyle’s Jeff Currie as saying on Squawk Box on Monday. “If you go down below 55, you’re now below the economics of the Permian,” he said, noting an oversupplied market.
By Charles Kennedy for Oilprice.com
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