Alpha

Discover

MarketsMay 5, 2025

Barrel Blues Force Big Oil Buyback Dilemma As Prices Hit Three-Year Lows

Shale Economics

Daniel Schoester

Go Deeper

Related stories

oil price

Trump's Iran Ceasefire Comments Shake Markets. Here's What Investors Need To Know

autonomous-systems

Rising Military Budgets Put Defense Stocks Back In Focus

biofuel

The Biofuel Supercycle Is Underway. Can the Industry Deliver?

Semiconductor

The AI Memory Trade Hits a Bear Market Despite Monster Earnings

Natural Gas

Gas Demand Set To Drop 0.5% As Iran War Chokes Off Supply

As crude prices sink to three-year lows, the oil industry has splintered like fractured shale rock. The double whammy of waning oil demand and OPEC+’s surprise production hike has sent barrel prices plummeting from $78 in Jan. 2025 to $57 today. With many producers squeezed beneath the ~$65 profitability threshold, this slowdown could halve America’s oil rig count and jeopardize one of energy firms’ biggest bargaining chips, share buybacks.

Oil titans weathered the storm as Exxon, Shell, and Chevron cleared Wall Street’s earnings bar — but markets remained unsold as the dipped 3% over the last 5 days.
Smaller firms haven’t been as lucky, with Phillips 66 and Hess missing EPS expectations by 25.6% and 6.4%, respectively.

Survival tactics: With the sector in freefall, buybacks are taking center stage to shore up share values. Shell launched a fresh $3.5B program, Exxon steadfastly maintained its $4.8B quarterly pace, while Chevron slashed repurchases by 30%, and BP followed suit. As Trump pushes for $50 barrels, it’s evident that not everyone can afford to keep their chips on this petroleum poker table.