US Oil Drilling Slowdown: 5 Key Charts to Watch in Global Commodity Markets This Week

US oil drilling slowdown prompts oil service companies to strategize. Refinery closures in Europe and the US will reduce capacity by 75,000 barrels per day this year. Ethanol producers in the UK face a dire future due to a US trade deal with the US. Aluminum tariffs imposed by the US have increased costs for American consumers. Clean energy developers rush to complete projects before tax credits expire in the US.

US oil drilling has experienced a significant slowdown this year, with a 12% decrease in activity, prompting oilfield-service companies like Schlumberger (SLB), Halliburton, and Baker Hughes to brace for substantial profit declines. The slowdown is primarily driven by crude prices hovering near $65, making new drilling activity less profitable [1]. The Dallas Fed’s Q2 Energy Survey indicated that oil and gas business activity has turned negative, with oil production and natural gas production both showing significant declines [1].

Analysts will be closely monitoring upcoming earnings calls for insights into the impact of the slowdown and potential new opportunities. Schlumberger (SLB) is expected to report a 14% drop in per-share profit when it kicks off the sector’s earnings season on July 18 [2]. Halliburton and Baker Hughes are also expected to report notable declines in profits, with Halliburton expected to report a 30% drop and Baker Hughes a 1.8% drop in per-share profit [2].

The slowdown in drilling has also led to a decline in hiring and a rise in uncertainty among industry players. The uncertainty index, as reported by the Dallas Fed, has soared to 47.1, the highest since 2020 [1]. Despite the challenges, operators still expect WTI to average $68 by year-end, but this is a narrow margin above breakeven for many private producers [1].

In parallel, refinery closures in Europe and the US are expected to reduce net capacity by 75,000 barrels per day this year, based on BloombergNEF tracking [3]. In China, the refining industry is at a "crossroads as demand approaches its peak," with 840K b/d of capacity at risk of closing before the end of 2028 [3]. Meanwhile, ethanol producers in the UK face a dire future due to a US trade deal that removed tariffs on imports of American ethanol, threatening to wipe out both of the UK’s domestic producers [3].

Aluminum tariffs imposed by the US have increased costs for American consumers. Top US producer Alcoa Corp. and mining giant Rio Tinto Group have reported significant financial impacts due to the tariffs, with Alcoa estimating a $135 million cost in the first half of the year and Rio Tinto estimating a $300 million cost [3].

Clean energy developers are rushing to complete projects before the US starts phasing out tax credits under US President Donald Trump’s economic legislation. Installations are expected to fall 41% after 2027 when wind and solar projects begin to lose eligibility for the tax incentives [3].

In conclusion, the US oil drilling slowdown and related developments in the global commodity markets are prompting oil service companies to strategize and adapt to the changing landscape. Analysts and investors will be closely watching the earnings calls for details on the impact of the slowdown and potential new opportunities.

References:
[1] https://www.ainvest.com/news/oilfield-service-companies-face-steep-profit-declines-drilling-slowdown-2507/
[2] https://www.bloomberg.com/news/articles/2025-07-17/oilfield-contractor-profits-seen-falling-on-drilling-slowdown
[3] https://www.bloomberg.com/news/articles/2025-07-20/five-key-charts-to-watch-in-global-commodity-markets-this-week