U.S. Majors Cash In as Permian Dominance Widens the Oil Gap
Upstream oil and gas—industry-speak for the exploration and production end of the business—has always been a game of geology, timing, and money. Right now, U.S. oil majors are holding the better hand in the world of E&P. And the reason is simple: they’ve got the Permian, and Europe doesn’t. According to Wood Mackenzie, crude and condensate production across the U.S. Lower 48 has hit an all-time high of 11.3 million barrels per day, but is on the cusp of peaking. They forecast output will start a slow decline by year-end, dropping by 500,000 bpd by 2027. But for ExxonMobil and Chevron, who dominate the Permian Basin, the story is different. Their growth runway is intact—and profitable. This divergence in fortune comes just as global demand projections are muddying the waters. OPEC’s latest World Oil Outlook sees global oil demand hitting 123 million bpd by 2050, requiring $18.2 trillion in new oil and gas investment. The IEA, by contrast, insists demand will peak before 2030. But regardless of who’s right, no one’s arguing that Permian oil is uncompetitive. With oil major breakevens below $45, according to WoodMac, along with WTI and ultra-low carbon intensity, the Permian is the upstream gift that keeps on giving. WoodMac expects ExxonMobil’s Permian output to rise 55% to 2.3 million boe/d by decade’s end, holding steady through 2040. Chevron is expected to churn out a 25% increase, to 1.2 million boe/d by 2030. In both cases, the Permian will supply nearly a third of total output—onshore, low-cost, and infrastructure-rich. It’s not just scale—it’s resilience. Even as the broader U.S. rig count drops (down 7 last week alone, to 544), these majors are using AI and advanced analytics to keep well costs low and recovery factors trending up. Goldman Sachs recently declared the U.S. shale boom years officially over. But that misses the nuance. Yes, the easy growth is gone. But for majors with prime Tier 1 acreage and deep capital pools, this isn’t the end—it’s the monetization phase. The focus now is on harvesting cash, not chasing barrels. What makes the Permian such a strategic fortress isn’t just its size—it’s the rare combination of geology, infrastructure, and optionality. With thousands of drilled-but-uncompleted wells, ample takeaway capacity, and unmatched midstream connectivity, operators can toggle activity up or down faster than anywhere else on earth. That responsiveness gives U.S. majors a tactical edge in volatile markets. And as capital discipline replaces boom-era exuberance, it’s the companies with scale and flexibility that will win. The Permian isn’t just a resource—it’s a lever for navigating the next two decades of uncertainty, and Exxon and Chevron are the only ones strong enough to pull it with confidence. European majors—BP, Shell, TotalEnergies, and Equinor—face a different calculus. Shell sold its Permian assets in 2021. BP and Shell have largely flat production outlooks, Woodmac says, hamstrung by underwhelming exploration and a delayed strategic pivot back toward upstream. By contrast, TotalEnergies and Equinor are actively building their U.S. Lower 48 positions, especially in gas, complementing their LNG portfolios. TotalEnergies has stitched together a respectable gas footprint in the U.S. through recent M&A. BP’s Lower 48 output is around 440,000 boe/d, about one-fifth of its global total. But they’re still playing catch-up in the Permian oil race, and entry now comes at a premium—if you can find an entry point at all. As WoodMac notes, post-consolidation, high-quality opportunities are scarce. That’s what makes the U.S. majors’ position so strategic. The Permian offers flexibility, scale, and adaptability in a way no international play open to IOCs can match. And as gas demand rises to fuel AI-driven electricity needs and LNG export growth, the associated gas volumes from the Permian are another tailwind—especially given their near-zero breakeven costs. For the EuroMajors, the challenge now is clear: make the most of what’s left on the table. That means doubling down on exploration, being opportunistic with M&A, and rethinking upstream as a long-term value driver—not just a bridge to renewables. TotalEnergies and Eni have made headway here, with exploration-led growth and diversified portfolios. Shell and BP? They’re late to the pivot and low on leverage. In the race to stay relevant in a stronger-for-longer oil world, unless Europe’s biggest players get bolder, the gap between US majors and Europe’s is only going to widen.
New EU Russia curbs may bolster Indian oil refiners’ reliance on traders
Indian private refiners that have leveraged cheap Russian crude to boost margins will be forced to find workarounds and rely more on traders to find new markets for their products after the latest round of European Union sanctions, traders and industry sources said. Russia is India’s top oil supplier, and refiners such as Reliance Industries and Nayara Energy have benefited in recent years from pressure on Russian crude prices from sanctions linked to its invasion of Ukraine. Many have then exported refined products to buyers in Europe. However in its 18th package of sanctions against Russia, approved on Friday, the European bloc banned imports of refined petroleum products made from Russian crude coming from third countries, excluding a handful of Western nations.
India’s decision to raise oil import from the US is more political than commercial
President Trump’s trade and tariff tantrums seem to be strongly working on India. The country’s crude oil imports from the United States surged by 51 percent during the first half of the current year ignoring the very high cost of import, including shipping, and travel time from the US ports. The political undercurrents, involving India’s ongoing trade negotiations with the US, are believed to be significantly responsible for the strategic shift despite a high time and cost burden. India, the world’s third largest consumer of petroleum, is the second largest importer of crude oil. The country is almost 90 percent import dependent on petroleum oil. The import focus has lately shifted substantially from traditional suppliers in West Asia to Russia and the US for price and diplomatic reasons. Thanks to the low price of crude oil from the Western sanctions-hit Russia, the latter has emerged as the single largest oil supplier to India since the middle of last year. China is also a major importer of Russian oil. Since the middle of last year, India has been playing hide-and-seek with China to become the largest buyer of Russian oil. Presently, India is using a new much-shorter sea route – the Eastern Maritime Corridor – significantly boosting commodity trade between the two countries, especially crude oil shipments. The Russian Urals crude oil price is $2.00 per barrel below the $60 per barrel limit imposed by Western nations amid weak Brent prices. The price of US Brent oil is around $69 per barrel. The new eastern route from Vladivostok to Chennai is translating into savings on two counts: shipment times between the two countries and thereby transportation costs. Earlier this year, India was under big trade pressure from the US to take steps towards making Washington “a leading supplier of oil and gas to India”, which could help the US bridge the trade deficit with India. US President Donald Trump asked India to step up oil imports from his country after his last meeting with Prime Minister Narendra Modi in Washington. Trump added that the US will “hopefully,” be India’s top oil and gas supplier. It sounded rather ominous or more like a warning as in 2024-25, India’s trade surplus with the US reached a record level of $41.18 billion, the largest from any country, from the $35.32 billion surplus it logged in the previous fiscal. India’s exports to the US grew by 11.6 percent to $86.51 billion. Its imports from the US increased by 7.44 percent to $45.33 billion. The most shocking part is: India’s one-sided foreign trade with China is leading to increasingly large trade deficits with that country. Trump is believed to have been intrigued by the fact that while India is focussed to benefit more from the US trade, its trade deficit with China reached an all-time high at $99.2 billion in 2024-25 and, at the same time, India’s sheepish reaction to China’s growing import restrictions from India. The country’s exports to China contracted by 14.5 percent to only $14.25 billion, compared to $16.66 billion in the previous fiscal. Now, Trump is ready to enforce a new trade deal to balance the US-India trade. This explains India’s sudden spike in crude oil imports from the US, this year. The country’s oil imports from the US jumped as much as over 270 percent year-on-year in the first four months of 2025, underscoring Delhi’s strategy of enhancing American imports amid prolonging trade pact negotiations. India is also importing more high-cost oil from distant Brazil purely for diplomatic reasons. The reason being advanced by India in support of its oil import decision to purchase substantially more from the US – also partly from Brazil – is that the country is diversifying its sources of crude oil in a volatile geopolitical and geo-economic environment. It may be noted that Brazil’s President Lula de Silva called Prime Minister Narendra Modi to convey condolences at the loss of lives in the terrorist attack in Pahalgam on April 22. At President Lula’s instance, the 17th BRICS summit in Rio de Janeiro condemned the Pahalgam terror attack among others and strongly supported India’s inclusion as a permanent member in the UN Security Council