U.S. oil production is approaching a turning point, according to Diamondback Energy CEO Travis Stice. In a letter to shareholders this week, Stice warned that domestic output has likely peaked and will begin to decline in the coming months, citing falling crude prices and slowing industry activity as key factors.
“U.S. onshore oil production has likely peaked and will begin to decline this quarter,” Stice wrote. “We are at a tipping point for U.S. oil production at current commodity prices.”
The warning comes as U.S. crude prices have dropped roughly 17% this year, weighed down by fears of a global economic slowdown tied to President Donald Trump’s renewed tariffs and an aggressive supply push from OPEC+ producers. Prices for West Texas Intermediate (WTI) crude briefly surged 4% on Tuesday to $59.56 per barrel amid expectations that U.S. supply will tighten.
Stice emphasized that adjusted for inflation, oil is now cheaper than it has been in nearly every quarter since 2004—excluding the pandemic collapse in 2020. That pricing reality, he said, is forcing producers to slash spending and slow operations, threatening broader economic impacts.
Diamondback, a major producer in the Permian Basin and one of the largest independent oil companies in the U.S., has already reduced its capital spending by $400 million for the year. The company now plans to drill between 385 to 435 wells and complete 475 to 550, while maintaining reduced rig and crew levels.
“We’ve dropped three rigs and one completion crew, and expect to stay at those levels for most of Q3,” Stice said.
The U.S. shale boom of the last 15 years helped make the country the world’s top fossil fuel producer, outpacing even Saudi Arabia and Russia. That shift reshaped the U.S. economy, reduced reliance on foreign energy, and strengthened national security. But Stice now warns that this progress is at risk.
“Today’s prices, volatility and macroeconomic uncertainty have put this progress in jeopardy,” he said.
Fracking activity is already falling sharply. The number of completion crews is down 15% nationwide and 20% in the Permian Basin since January, Stice said. Oil-directed drilling rigs are expected to drop nearly 10% by the end of Q2, with further declines projected in the third quarter.
Adding to the pressure are rising costs tied to tariffs. Stice said Trump’s steel tariffs have added around $40 million annually to Diamondback’s expenses, raising well costs by about 1%. While some of this impact may be offset by operational efficiencies, the CEO warned that sustaining current output levels at lower prices may no longer be financially viable.
Stice likened the situation to approaching a red light while driving: “We are taking our foot off the accelerator. If the light turns green, we’ll hit the gas again—but we’re prepared to brake if needed.”
As the U.S. energy sector confronts an increasingly uncertain landscape, the prospect of declining domestic production is no longer just a possibility—it’s becoming a reality.
