Exxon and Chevron, the two largest U.S. oil companies, reported significantly lower profits in the first quarter due to the economic impact of President Trump's trade policies, which have led to decreased oil prices and increased material costs. With U.S. crude prices falling below $60 a barrel, many companies find it unprofitable to drill new wells, prompting a reduction in drilling activities in key areas like the Permian Basin. Chevron and Exxon are attempting to navigate these challenges by maintaining production plans and cutting costs, with Chevron specifically reducing spending on share buybacks and mitigating tariff effects by sourcing materials locally. The industry faces uncertainty about how long oil prices will remain low, with potential impacts on domestic production if prices fall further. Additionally, Chevron must adjust its operations in Venezuela due to new trade policies reversing previous allowances for oil production in the country.

Exxon and Chevron have reported their lowest first-quarter profits in years, with Chevron's profits falling more than a third to $3.5 billion and Exxon's profits down 6 percent to $7.7 billion, both missing analyst expectations.

The decline in profits is attributed to President Trump's trade policies, which have weakened consumer confidence, pushed oil prices below $60 a barrel, and increased costs for materials like steel due to imposed tariffs.

The number of active drilling rigs in the Permian Basin, the largest U.S. oil field, has decreased by 3 percent as companies delay discretionary expenses, with industry-wide spending expected to decline this year.

Chevron announced plans to reduce spending on share buybacks while maintaining its annual production and capital spending forecasts, and is mitigating tariff impacts by purchasing materials such as steel domestically.

With oil prices potentially falling to $50 a barrel, domestic production could decrease by approximately 8 percent within a year, adding pressure on companies to reduce costs amid uncertain trade policy outlooks.

Chevron faces challenges in Venezuela due to new U.S. policies reversing previous allowances for oil production, affecting its ability to export oil as changes to its license have hindered operations.

Both Exxon and Chevron are focusing on cost-cutting measures and strategic planning to navigate the current market uncertainties and ensure shareholder confidence in their long-term resilience.