NEW YORK: In Montana, a father and son running a small oil business are cutting their salaries in half. In New Mexico, an oil truck driver who supports his family just went a week without pay. And in Alaska, lawmakers have had to dip into the state’s savings as oil revenue dries up.
The global economic crisis caused by the coronavirus pandemic has devastated the oil industry in the US, which pumps more crude than any other country. In the first quarter, the price of US crude fell harder than at any point in history, plunging 66 percent to around $20 a barrel.
A generation ago, a drop in oil prices would have largely been celebrated in the US, translating into cheaper gas for consumers. But today, those depressed prices carry negative economic implications, particularly in states that have become dependent on oil to keep their budgets balanced and residents employed.
“It’s just a nightmare down here,” said Lee Levinson, owner of LPD Energy, an oil and gas producer in Tulsa, Oklahoma. “Should these low oil prices last for any substantial period of time, it’s going to be hard for anyone to survive.”
Crude prices recovered some ground, trading at around $28 a barrel Friday.
On Friday, President Donald Trump met with oil executives but there were no announcements, and prices remain well below what most US producers need to stay afloat.
Among the latest casualties is Whiting Petroleum, an oil producer in the Bakken shale formation with about 500 employees that filed for bankruptcy protection Wednesday.
Schlumberger, one of the largest oilfield services companies, slashed its capital spending by 30 percent and is expecting to cut staff and pay in North America. And Halliburton, another major oilfield services provider, furloughed 3,500 of its Houston employees, ordering workers into a one-week-on, one-week-off schedule.
“You will see a tremendous loss of jobs in this industry,” said Patrick Montalban, owner of Montalban Oil and Gas, based in Montana, who along with his son is slashing his salary in half and plans to cut the his remaining employees’ salaries by 25 percent and end their health insurance benefits.
The impact is far-reaching. In Alaska, lawmakers recently passed a budget that sharply draws down a savings account that had been built up over the years when oil prices were higher. In New Mexico, where a third of the state’s revenue comes from petroleum, the governor slashed infrastructure spending and will likely cut more in a special legislative session.
In Texas, which produces about 40 percent of the country’s oil and employs more than 361,000 people, the picture is especially bleak. Three weeks ago, Bobby Whitacre, vice president of Impala Transport in Plano, Texas, was looking to hire a well site supervisor for $200 a day with paid time off. Now he’s had to lay off many of his workers.
“It’s dead. It’s dead as can be,” he said.
While many industries paralyzed by the coronavirus pandemic received help from a recent $2 trillion congressional relief package, the energy sector was largely left out. The American Petroleum Institute, the oil industry’s main lobbying group, has maintained its free market philosophy, saying it does not want direct financial assistance from government. But the group did ask the federal government to relax environmental rules.
Some smaller producers would welcome financial relief.
Chaos and scrambling in the US oil patch as prices plummet
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Chaos and scrambling in the US oil patch as prices plummet
- Schlumberger, one of the largest oilfield services companies, slashed its capital spending by 30 percent and is expecting to cut staff and pay in North America
Fitch maintains neutral outlook on GCC corporates
RIYADH: Gulf Cooperation Council corporates are expected to see largely stable conditions in 2026 as government-led investment supports earnings, offsetting pressure from lower oil prices and tighter funding conditions, according to a new analysis.
In a report published this week, Fitch Ratings said sustained public-sector capital expenditure — particularly in infrastructure and energy — will continue to underpin regional corporate performance, even as lower oil-price assumptions are likely to constrain public- and private-sector budgets.
This comes as GCC economies are forecast to grow 4.4 percent in 2026 and 4.6 percent in 2027, driven by stronger non-hydrocarbon activity and rising hydrocarbon output, the World Bank said.
In its Global Economic Prospects report released earlier this month, the World Bank said non-oil sectors, which account for more than 60 percent of GCC GDP, are expected to be supported by large-scale investment across the region.
Samer Haydar, Fitch’s head of GCC corporates, said: “We expect sustained public-sector capex to support steady earnings for GCC Corporates in 2026, especially in infrastructure and energy, even as lower oil price assumptions constrain fiscal flexibility.”
He added: “Sub-investment-grade credits will face low leverage headroom and increased interest-rate sensitivities.”
Fitch expects non-energy sectors to keep benefiting from state-backed investment programs — especially in Saudi Arabia and the UAE — while projecting GCC non-oil GDP growth of 3.7 percent in 2026, a moderation from 4.2 percent previously.
The agency also said regulatory reforms tied to diversification are supporting initial public offering activity, with a “robust” pipeline into 2026 supported by policy measures and deep local markets.
Credit profiles remain largely stable, with Fitch noting that about 95 percent of rated GCC issuers carry Stable Outlooks, and eight upgrades were recorded during 2025, partly linked to sovereign rating actions.
Ratings across Fitch’s GCC corporate universe span from “AA” to “B”, with government-related entities tending to be larger; Fitch said GREs represented about half of its rated GCC corporates in 2025.
On balance-sheet metrics, Fitch expects leverage to be modestly higher in 2026, with average leverage at 2.4 times before easing to 2.3x in 2027.
While strong 2025 earnings provided headroom for sectors including oil and gas, real estate, utilities and telecoms, the agency said industrials, retail and homebuilders typically operate with tighter leverage capacity, leaving less cushion amid still-elevated input and operating costs.
Funding conditions are expected to remain a key differentiator, Fitch said, adding that GCC issuers pushed their “maturity wall” out to 2028, helped by 2025 bond and sukuk issuance — particularly from UAE and Saudi Arabia-based issuers refinancing maturities early.
The agency estimates aggregate corporate fixed-income maturities for UAE and Saudi Arabia-based entities at about $50 billion over the next five years, and said persistently higher funding costs are likely to weigh more on high-yield issuers with sizable near-term maturities than on investment-grade peers.
Fitch also flagged rising capex as a near-term cash-flow constraint. It expects capex intensity to increase in 2026, keeping free cash flow subdued for most GCC corporates, after negative free cash flow peaked in 2025 due to the timing and scale of investment programs.
Highly rated issuers are increasingly using asset-light approaches — such as joint ventures — to reduce upfront spending, while others may rely on hybrid instruments, equity increases, or asset disposals to manage funding pressures.
Macro assumptions remain closely tied to the oil backdrop. Fitch forecasts Brent crude will average $63 per barrel in 2026, down from $70 per barrel in 2025, as supply growth — particularly from the Americas — outpaces demand.
Prices are expected to remain above fiscal breakevens for most GCC producers, though Fitch highlighted exceptions including Bahrain and Saudi Arabia, with Oman only marginally below breakeven.
Across sectors, Fitch expects GCC property earnings to be underpinned by regional economic expansion and projected average occupancy above 90 percent in 2026, broadly in line with 2025.
It also pointed to a new Saudi regulatory provision freezing annual rent increases for five years across residential, commercial, and land leases, which it expects to limit landlords’ ability to pass on base rent increases.
For homebuilders, Fitch expects higher working-capital needs as pre-sales payment plans in prime Dubai locations ease toward 50 percent in 2026 from a peak of 70 percent, while projecting earnings before interest, taxes, depreciation, and amortization margins around 26.8 percent for most UAE-based homebuilders and gross leverage averaging about 2 times.
Fitch highlighted three key risks to monitor in 2026: potential regional escalation around the Red Sea that could disrupt supply chains and raw material costs; a widening scope of rescaling mega projects in Saudi Arabia; and funding costs staying higher than expected, which could curb access to debt capital markets for non-GRE issuers.
