The U.S. crude oil benchmark temporarily plunged below the stress-inducing $60 per barrel threshold on Monday amid tariff and economic slowdown fears, putting the nation’s record-high volumes of oil production at risk.
The dip below $60 for front-month NYMEX WTI oil for the first time in four years was its lowest since April 2021 when the pandemic was still in full swing. Prices rebounded to a settlement price of $60.70 per barrel in the afternoon. Trump administration tariff concerns are leading the drop, but global demand concerns were already rising in recent months. OPEC exacerbated the situation last week with an unexpected announcement to increase volumes.
Energy analysts see the $60 per barrel price as a key threshold when oil producers scale back activity and, eventually, cut back on production. Prices started April above $70.
“At $60, the U.S. is going to slow down. There’s no question,” said Marshall Adkins, head of energy for Raymond James. “Production is going to go down. It just won’t happen overnight.
“We just got hit over the heads by a bat. We’re just trying to get off the ground to see what to do,” he added. “The word of the day is uncertainty.”
The U.S. currently churns out nearly 13.6 million barrels of crude daily, up from about 11.3 million barrels a day in April 2021, according to the U.S. Energy Information Administration. The U.S. oil industry has essentially fluctuated between growth and stability—maintenance mode—since the pandemic without any major setbacks until now.
To put oil pricing into context, the industry cuts back at $60 per barrel. “But $50 is a disaster for everyone,” Adkins said. “And you’re not going to get ‘Drill, baby, drill’ or meaningful activity growth unless it’s $85 or above.”
Research firm Rystad Energy estimated the average breakeven price for profitability in the U.S. oil sector is $62 per barrel.
“With Lower 48 production growth already unlikely outside the Permian [Basin], a downshift in the country’s most prolific oil basin would decelerate the rate of production growth in 2025, should prices remain subdued,” said Matthew Bernstein, Rystad vice president for North American oil and gas.
Gabriele Sorbara, managing director at Siebert Williams Shank & Co., said most oil producers will take a wait-and-see approach with the tariffs to see if they stick and how markets continue to react.
So, the industry is not coming to a standstill unless prices continue to plummet. One strategy companies will take, Sorbara said, is continuing to drill wells—maybe at a slower pace—but not completing them or bringing them online unless prices recover.
