President Trump's wish to bring down oil prices has so far gone his way, with crude oil futures hovering near four-year lows.
And some on Wall Street think prices have a lot further to fall before the administration would be motivated to step in to support oil markets the way cascading bond prices may have been the catalyst for a 'Trump put' in the form of a pause on tariffs .
"The price floor is now much lower," wrote JPMorgan head of global commodities strategy Natasha Kaneva and her team on Monday.
"Unlike the Biden administration, which limited downside risk by guiding the refill of the US SPR [Strategic Petroleum Reserve] when WTI prices fell below $70, the Trump administration is actively pursuing lower oil prices, with intervention unlikely unless price drops to $50."
That would imply about a 20% drop in oil prices from current levels, as West Texas Intermediate ( WTI ) crude oil prices, the US benchmark, hovered near $61 per barrel on Monday. Brent ( BZ=F ) crude oil, the international benchmark, sat just below $65 a barrel.
Both gauges were down over 14% so far this year as of Monday afternoon.
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Though President Trump said in February the US will fill up the strategic reserve — a move that would increase demand and, in theory, support prices — no specific timeline has been given.
Wall Street analysts have been lowering their price target for crude in recent weeks as demand fears grew out of an escalating trade war sparked by Trump's tariff policy. Prices were also weighed down by the Organization of Petroleum Exporting Countries and its allies, known as OPEC+, voting to increase output next month.
On Monday, JPMorgan lowered its year-end average price forecast for Brent to $66 per barrel and WTI to $62. The firm also predicted WTI will dip below $60 a barrel on a monthly average basis starting this August, closing the year at $55.
"US shale producers will bear the brunt of these developments," Kaneva wrote, forecasting a contraction in production in 2026.
Industry insiders have also highlighted that the rising cost of drilling is already causing production to plateau after the US produced record amounts of oil last year .
Rig count data for the week ending April 11 showed 567 rigs operating versus 598 in 2024, according to Bake Hughes data.
"Drill, baby, drill ... cannot happen with prices below $70 per barrel simply because US oil patch can't afford that," Ed Hirs, senior fellow at the University of Houston, told Yahoo Finance on Monday.
Despite deregulation and industry-friendly policies from the Trump administration, the cost of drilling has risen. Hirs says 25% steel tariffs have made it up to 15% more expensive to build wells and drill pipes into the ground. He adds the cost of manual labor around the oil patch has also increased.
"There's no way to save enough in deregulation to make up for losing $20 a barrel in revenue. The cost numbers just don't work," Hirs said.
Meanwhile, energy-related stocks have tumbled in recent weeks, wiping out their first quarter gains that saw the sector serve as a market leader to begin 2025.
As of Monday, the S&P 500 Energy Sector ( XLE ) was down nearly 8% year to date, the third-worst performer for the year behind Tech ( XLK ) and Consumer Discretionary ( XLY ) and only barely outpacing the index's overall loss.
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