Trump Said 'Drill, Baby, Drill': Oil Companies' Answer At $55 Crude, 'We Can't'

When Donald Trump took the presidential oath of office in January 2025, he made his energy agenda unmistakably clear, vowing to unleash American oil production under the rallying cry, "Drill, baby, drill."

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Few could have anticipated how quickly that promise would begin reshaping the energy market, or the unintended consequences that would emerge less than a year later.

Declaring a national energy emergency during his Jan. 20 inaugural address, Trump blamed inflation on "massive overspending and escalating energy prices," pledging to accelerate domestic drilling and tap what he called the nation's vast reserves of "liquid gold."

Fast forward to mid-December 2025, and oil prices are hovering near $55 a barrel — the lowest level in nearly five years and down roughly 25% year-to-date.

While cheaper oil has delivered relief to consumers, it has also introduced a new problem: at these prices, pumping crude is no longer profitable for a large segment of U.S. producers.

The result is growing concern that parts of the domestic oil industry could be forced to scale back or shut down altogether.

Drill, Baby, Drill Falls Short On Math As Breakeven Oil Prices Are Above Market Levels

U.S. energy stocks sold off sharply this week as oil slipped to the $55 level, setting off warning signals across Wall Street research desks.

The Energy Select Sector SPDR Fund (NYSE:XLE) tumbled 3% on Tuesday, marking its worst session since late June.

According to a December 2025 survey by the Dallas Federal Reserve, when WTI crude falls below $61 per barrel, most U.S. oil companies struggle to profitably drill new wells.

"Only large independents or oil majors can sustain production levels in a lower price environment," Johannes Rauball, crude oil analyst at Kpler, told Benzinga.

"The average U.S. breakeven, if everyone is treated equally, is slightly above $60 per barrel, so it does impact quite a few players," Rauball added.

Smaller private producers are particularly vulnerable, he noted, as they lack the scale and access to advanced technologies that allow larger firms to operate more efficiently at lower prices.

Oil At $55: Who Survives, Who Struggles

Energy analyst Jeff Krimmel, founder of Krimmel Strategy Group, told Benzinga that while some operators can still turn a profit with oil below $50 per barrel, others face mounting pressure.

According to Krimmel, companies such as EOG Resources (NYSE:EOG) and Diamondback Energy (NASDAQ:FANG) have "plenty of room to spare" even if oil prices fall below $50 per barrel.

By contrast, Ovintiv (NYSE:OVV), Marathon Oil (NYSE:MRO), Murphy Oil (NYSE:MUR) and Occidental Petroleum (NYSE:OXY) would likely report losses at or below that level.

"I'd expect EOG and Diamondback to have more optionality in this lower oil price environment than Murphy and Occidental do," Krimmel told Benzinga.

Looking at the broader market, Krimmel indicated that oil markets have been in surplus for most of 2025 — a condition expected to persist through much of 2026.

"I would argue prices reflect this reality," he said. "This market dynamic is well known and often discussed."

Still, Krimmel believed sentiment turned broadly bearish, leaving room for a rebound.

"If I had to guess whether the next five-dollar move is up or down, I would guess it's up," he said. "Even small positive surprises could move oil prices back up from here."

Is A Russia-Ukraine Peace Deal Already Priced In?

Krimmel also addressed whether oil markets are factoring in the possibility of a Russia-Ukraine peace deal.

"I believe a near-term peace deal is priced into markets," he said, noting that investors are closely watching the Trump administration's efforts to broker an end to the conflict.

"With President Trump so personally involved, I think markets believe some form of peace will materialize in the near term," Krimmel said.

According to Polymarket, traders are currently assigning just a 25% probability that a Russia-Ukraine peace deal will be signed by March 31, 2026.

For now, oil at $55 is testing the limits of U.S. shale, revealing which producers can endure a prolonged downturn, and which may not survive the consequences of "drill, baby, drill."

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