By Georgina McCartney and Arathy Somasekhar
HOUSTON, Jan 9 – U.S. oil producers already reeling from low oil prices are facing renewed pressures, as President Donald Trump pushes them to boost output in Venezuela – a move that would weaken the oil market, cut revenues and hurt industry at home.
Trump has enacted policies that he says would unleash American energy and lower prices at the pump – a promise that would help U.S. consumers but squeeze oil industry revenues. It’s hard to do both – because lower profits mean oil companies drill less, not more.
Trump has asked U.S. oil companies to fix Venezuela’s oil industry and boost its production. In years gone by, access to Venezuela’s vast onshore reserves – estimated to be the world’s largest – would have been a once-in-a-generation opportunity.
But with oil markets well supplied, OPEC members sitting on spare capacity – and with abundant opportunities to pump oil more cheaply elsewhere – U.S. oil producer executives are facing the prospect of another hit to profits in the short term if more Venezuelan oil flows to the United States.
Oil prices in the U.S., the world’s largest producer, are already below the $65 a barrel level many need to turn a profit, prompting mass layoffs, idled oilfield equipment and spending cuts.
U.S. oil futures settled at $59.12 on Friday.
U.S. oil executives, ranging from majors like Chevron and Exxon to lesser-known companies from Energy Secretary Chris Wright’s home state of Colorado, were set to meet at the White House on Friday to discuss potential investment plans in Venezuela.
Treasury Secretary Scott Bessent this week said smaller, independent companies have expressed interest in developing the South American country’s vast resources, and the U.S. government has floated the idea of subsidizing investments into the industry.
The reality on the ground for U.S. producers is stark, particularly as Trump moves Venezuelan barrels to the already well-supplied market. Top producers Chevron, Exxon Mobil, ConocoPhillips, and the world’s largest oil service providers SLB and Halliburton collectively cut thousands of jobs in 2025.
“This recent move to redirect Venezuelan crude to the U.S., potentially tens of millions of barrels will put pressure on domestic shale producers,” said Linhua Guan, CEO of Surge Energy America, one of the largest private U.S. crude producers, with operations in the Permian Basin.
“With U.S. output near record highs, smaller U.S. shale operators face tighter margins and increased vulnerability in an already oversupplied market,” said Guan.
Venezuela would sell 30 to 50 million barrels of sanctioned oil to the United States, Trump said this week, following the U.S. capture and transfer of Venezuelan President Nicolas Maduro from Caracas to detention in the United States over the weekend.
“The surge of Venezuelan barrels is more than a supply shift; it is a stress test for the American shale model,” said Jasen Gast, CEO of Houston-based oilfield service company, Oilfield Service Professionals, which operates in the U.S. as well as internationally.
U.S. production climbed to a record 13.61 million bpd in 2025 but it is set to fall to 13.53 million bpd in 2026, according to the Energy Information Administration, while average U.S. retail gasoline prices fell for the third straight year to $3.10 a gallon last year.
With output growth slowing, and some expecting declines, producers are struggling in a weak price environment amid oversupply. Additional heavy Venezuelan barrels, which are well-suited to many U.S. refineries, could further flood the market and pressure prices.
“As these heavy-grade barrels flood Gulf Coast refineries, they create a price ceiling that threatens to pin WTI near the $50 mark, squeezing the margins of even the most efficient Permian operators,” Gast said.
Wright said on Wednesday at a conference in Miami that he wants to sell Venezuelan oil to U.S. refineries. They could benefit from any influx of barrels from the South American country.
But what may be a boon to refiners would hurt the companies operating in America’s vast oilfields. Shale producer EOG Resources’ Chief Financial Officer Ann Janssen said at that same conference that oversupply and potentially higher production from Venezuela was pushing oil prices down, a trend that is likely to persist for several more quarters.
“Prices are going down to the point that either OPEC cuts production, or U.S. shale players cut their budgets and U.S. production rolls over,” said Dan Pickering, chief investment officer at Pickering Energy Partners.
US SHALE PRODUCTION IN THE BALANCE
Activity in the oil and gas sector was in decline last year, according to a Federal Reserve Bank of Dallas survey that polls executives across parts of Texas, New Mexico and other key production areas. Producers across the U.S. have watched the best drilling locations dry up and breakeven prices rise.
“$50 oil is really where production would start to fall,” said Matthew Bernstein, Vice President, North America oil and gas at Rystad Energy.
Rystad sees onshore U.S. output, excluding Alaska, declining by around 150,000 bpd through 2026 in a $50 price environment.
Technological improvements have allowed drillers to eke out more oil at lower prices, but some analysts and industry participants have warned those improvements may be approaching their limit.
The OPEC+ producer group opted to pause production target increases for the first quarter of 2026, amid ample global supplies. OPEC could, however, start increasing output again as it seeks to take market share from U.S. shale producers.
Redirecting Venezuelan barrels into the U.S. market is part of a broader effort to combat inflation by pressuring oil prices, Michael Alfaro, CIO of Gallo Partners, a regulatory – and policy-focused hedge fund said. While Trump is supportive of U.S. shale in principle, lower oil prices combined with steel tariffs, are two persistent headwinds for this group, he added.
“I’m very much in a wait-and-see mode because there are still big unanswered questions,” said Mike Oestmann, CEO of shale producer Tall City Exploration in the Permian Basin.
(Reporting by Georgina McCartney and Arathy Somasekhar in Houston; Editing by Liz Hampton, Simon Webb and Diane Craft)
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