Big Oil Is Tightening Its Belt

A corporate 'brain drain' is sweeping Big Oil...

ConocoPhillips (COP) announced last month that it's laying off up to 25% of its global workforce. That includes not just roughnecks and rig workers... but also highly skilled engineers in Houston and other U.S. hubs.

And it's not alone...

Chevron (CVX) said it's cutting as many as 8,000 corporate jobs, or about 20% of its global workforce. Like other oil majors, it's shifting thousands of white-collar jobs and related positions to lower-cost countries like India.

Earlier this year, Chevron even announced a $1 billion investment in a new engineering campus in Bengaluru.

These moves mark a major turning point for Big Oil. Even during previous downturns, technical teams were considered untouchable. Now, they're being rebuilt from scratch overseas.

This shift is happening even as U.S. energy policy swings back toward deregulation and dominance. But with oil prices stuck below breakeven for many drillers, cost efficiency is driving strategy... not politics.

Today, we'll discuss how the energy sector's latest wave of white-collar offshoring reflects deep cost pressures... and why it could turn Big Oil into a cash machine when oil prices rebound.

Big Oil's cost reset is deeper than it looks...

Oil prices have slumped from a peak of about $116 per barrel in 2022 to about $62 per barrel today. That's the difference between the industry swimming in profits... and barely breaking even.

Indeed, even with favorable political winds, many exploration and production companies are struggling to turn a profit. That's forcing them to rethink their cost base in a more radical way than in past cycles.

In previous downturns, layoffs were common... but mostly among positions in the oilfield. Engineers and technical staff were largely shielded, as intellectual capital couldn't be easily replaced.

That's no longer the case. Chevron's new facility in India will employ thousands of petroleum engineers, geologists, and other skilled roles... all positions that used to be based in the U.S.

By comparison, Indian engineers typically earn one-third or -fourth of their American counterparts. And that math is just too compelling to ignore.

ExxonMobil (XOM) has been expanding to India, as well. And it has invested in technical centers in China, Malaysia, and Qatar, too.

This shift represents a major change in the industry's labor structure. Instead of offshoring rigs and refining capacity, oil majors are now offshoring brainpower.

In a sense, they're flipping the old playbook... keeping capital on shore, while exporting talent needs abroad.

And the timing makes sense. As we covered last month, OPEC's oil-supply policies are driving prices down, all while global demand is deteriorating.

Energy companies are already lean after a decade of margin pressure. Now they're testing whether they can run even more efficiently at a time when demand and pricing are volatile.

If they succeed, the upside is massive. Because when prices rise again – and they eventually will – these companies will be operating with 20% fewer people and radically lower overhead. That creates powerful operating leverage.

The next oil boom could be far more profitable...

Big Oil is planning for survival in a structurally tougher market. Engineering roles that were once considered essential are now subject to global labor calculus.

That may be tough news for U.S. workers. But it's good news for investors.

The same companies that once needed oil above $70 per barrel to generate real profits are now restructuring to thrive at much lower prices.

That means if oil prices rise, and the major oil companies have fewer costs, more of that extra cash can go right toward investing in the business... and rewarding shareholders.

In short, the U.S. energy sector is finally learning to run lean. And investors who understand that shift early will be best positioned when oil eventually rebounds.

Regards,

Joel Litman
October 9, 2025