Diamondback Energy, the largest shale producer in the United States, has decided against increasing drilling activity next year despite the rise in WTI crude oil prices by $20 per barrel compared to last year. This decision comes at a time when there are many uncertainties in the global market.
Current Oil Price Situation and Its Impact on Producers
Currently, the average price of WTI oil this year has reached $86.72 per barrel, which shows a significant increase compared to the average of $64.94 in 2025. However, Diamondback Energy has stated that it has no plans for a significant increase in drilling activity in 2024. Diamondback's CEO, Travis Stice, stated during the third-quarter earnings call this year: "We don’t want to be unnecessarily cautious, but it’s always good to prepare the company for downward volatility."
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Conservatism Against Market Volatility
While Diamondback Energy generated $2.1 billion in free cash flow in the third quarter of this year and has also increased its dividend and slightly raised its production forecast for this year, it remains cautious about increasing production. Stice emphasized: "The macro market environment is extremely unstable, and predicting when global oil supply will normalize seems impossible. Therefore, we expect current volatility to continue."
On the other hand, some smaller and more independent producers in the United States appear to be more inclined to increase drilling activity with rising oil prices. However, larger shale producers are refraining from taking significant steps towards increasing production due to uncertain economic conditions. Nathan Nemtz, a research director at Wood Mackenzie, noted that "oil price volatility makes companies cautious, and a message on social media can drop oil prices by $20 per barrel."
Given the market conditions, it is possible that other large shale producers will also adopt Diamondback Energy's approach and avoid increasing costs during periods of severe price volatility. While oil production in the United States has slightly increased compared to last year, it is not enough to offset major supply disruptions from the Middle East.
