Shale Majors Cut Spending, Slowing US Oil Production Growth

US shale majors are cutting spending plans despite higher oil prices, according to recent data. The cuts are designed to reduce debt and boost shareholder returns, but this may slow down production growth in the world's top producer.

Bloomberg reported that major players such as Chevron and ConocoPhillips spent 10% less over the first six months of the year, while Occidental reduced its spending on operations in the Permian by up to a fifth. Other companies like APA Corp., HighPeak Energy, and Matador are also trimming their budgets.

The decision to prioritize shareholder returns and debt repayment is not new for Big Oil and independent shale majors, which have been following this path for years. However, this may lead to slower production growth in the US, a trend that has already started to show. According to data from the Energy Information Administration, US crude oil production reached 13.714 million barrels daily in May, but growth has slowed down since 2020.

The global oil market is expected to slip into a deficit of 1.8 million barrels per day due to rising demand and reduced supply. However, shale majors seem hesitant to increase production despite higher prices. This suggests that there may be a structural change in the industry, with companies prioritizing discipline and shareholder returns over production growth.