Big Oil’s Short-Term Worries Mask Bullish Long Term

• TotalEnergies is slashing annual capex by $1B for four years, while Chevron, ConocoPhillips, and shale majors are cutting jobs and investment.
• U.S. shale drilling is slowing, OPEC+ is underdelivering on promised output hikes, and demand remains resilient.
• Oil and gas will remain critical for oil majors despite jitters over reduced buybacks and dividends.

TotalEnergies said this week it would cut its capital spending by $1 billion annually over the next four years. Chevron and ConocoPhillips are cutting jobs—as are many others in the industry. Shale majors are cutting spending, as well. It is not looking good for the oil industry right now—but it won't last forever.

That the oil industry has become more cautious lately is a fact – challenges from pro-transition energy government policies have been one reason, and the natural price fluctuation has been another. Now, pretty much every forecaster out there is predicting even lower international oil prices for next year.

They are invariably citing an imbalance between supply and demand, with lukewarm demand and excess supply, thanks to OPEC. Yet here is something interesting: talk about oversupply resulting from a drill-at-will behavior from the U.S. shale industry has stopped. Perhaps because shale has "gone from 'drill, baby, drill' to 'wait, baby wait'," per one industry executive.

So, drilling in the key non-OPEC oil producer is in fact shrinking, not expanding, and OPEC itself is falling short of its own production boost targets. The OPEC+ members have so far delivered three-quarters of the increases that began in April 2025. The rise could drop to half of the volumes promised later this year, according to traders and analysts, as some members are close to capacity while others are compensating for previous overproduction. Read more