Oil price in free fall: Saudi Arabia announces change of course – and US producers cut billions in investments

Oil price in free fall: Saudi Arabia announces change of course – and US producers cut billions in investments Business Insider • 4 hours • 2 minutes read US President Donald Trump is calling for cheaper oil prices – and in doing so, he is putting the domestic shale oil industry under pressure. His target price of $50 per barrel is hitting producers in the Midwest hard. The oil price always oscillates between two extremes: It must not be too low to keep investments in production attractive, but also not so high that it slows economic growth. The current price of Brent crude is just over $60 per barrel (approximately €57 per 159 liters) – a significant drop since its peak in March 2022. At that time, rising interest rates and declining growth drove the price plummeting. OPEC+ intervened with production cuts, which initially stabilized the price level. But since "Liberation Day" in early April 2025, the curve has been pointing downward again, reports "Wirtschaftswoche." Oil Price: Geopolitical Tensions Intensify Free Fall Some geopolitical tensions are further exacerbating the downward trend. The trade disputes between the US and China, the two largest oil consumers, continue to have a negative impact. The fragile peace between India and Pakistan also poses risks to global demand – especially if India's economy weakens as a result of a conflict. There is now little consensus within OPEC+: "We can cope with a longer period of low oil prices," says Saudi Arabia. The country no longer seems willing to bear the brunt of the production cuts. Trump Wants Lower Prices for the US US President Trump, meanwhile, is focusing on low prices for American consumers and is demanding higher production from Saudi Arabia. The goal: "$50 per barrel," as advisor Peter Navarro announced. But this goal directly contradicts Trump's support for the domestic oil industry, which depends on a certain price level. If the price drops too sharply, investments are no longer worthwhile – a dilemma for the president's campaign strategy. Shale oil producers in the US Midwest are already feeling the effects. Companies like Diamondback Energy and Coterra Energy are drastically cutting their spending in the Permian Basin. "We're closing down the hatches," Coterra CEO Tom Jordan said, according to "Wirtschaftswoche." Diamondback CEO Kaes Van't Hof also sounded the alarm in an investor letter: Production is being scaled back because "the light is red ahead." Why investors should be cautious about oil prices Investors also need to be cautious. Oil prices did rise briefly after the US government announced a tariff pause in mid-April. However, given the market situation, many experts continue to advise caution. The share valuations of many oil companies remain high despite falling prices. Even major players like Shell are considering acquisitions in light of market developments – but only "if BP's share price falls even further," as Bloomberg reports. There are still options for speculative investors – such as so-called short certificates, which increase in value when oil prices fall. For example, if the oil price falls to $45 by November, such a certificate could generate a profit of 54 percent. "We're closing the hatches," says Coterra CEO Tom Jordan, according to "Wirtschaftswoche." But be careful: These leveraged products lose just as much value when the oil price rises – in the worst case, there's a risk of total loss. Those who enter into such bets should therefore work with limited investments and clear exit scenarios.