Venezuela’s potential oil return deepens glut weighing on US shale producers

US shale-oil producers were already facing four-year low prices, and the US capture of Venezuelan president Nicolaá Maduro and his wife, Cilia Flores has renewed investor concern, hitting the share prices of independent frackers such as Diamondback Energy and Devon Energy, the outlet said.

Fracking supplied 64% of US crude oil production in 2023, and with US output averaging 13.6m barrels a day the country is the world’s largest producer. Analysts say Venezuela’s output will take years to ramp up, limiting near-term effects, though Donald Trump has urged firms to move quickly.

The industry is also contending with a global supply glut after an unwinding of 2023 voluntary Opec cuts and production growth in non-Opec countries including Argentina, Brazil, Canada, China and Guyana. Oil prices have been trending down since passing $100 in early 2022; nearby Nymex West Texas Intermediate futures trade at about $56 a barrel, with longer-dated contracts around $56–$57 a barrel until June 2028.

The Federal Reserve Bank of Dallas estimates breakeven prices at $26–$45 for existing wells and $61–$70 for newly drilled wells, a range that makes sustained low prices challenging for frackers. Industry observers say capital discipline since 2020 has left surviving producers in better fiscal shape, and companies are likely to keep output flat in 2026, the Energy Information Administration estimates 2026 production at 13.5m BPD, down slightly from 2025.

Key Topics

Business, Shale Oil, Venezuela, Diamondback Energy, Devon Energy, West Texas Intermediate