Bernstein: The 'Donroe Doctrine' and Oil Services E&P Capex Outlook
Summaries are public. PDF access requires an active membership; all members have the same access. Sign in
Bernstein introduces the 'Donroe Doctrine,' suggesting the Trump administration may adopt new policies toward Venezuela and Iran, creating a 'new frontier' for oil services. Both countries currently produce well below historical peaks. Venezuela produced 0.9 million barrels per day in 2025 (versus 2.6 million in 2016), while Iran produced 3.5 million (versus 6 million in 1974).
Reviving production could require an additional $40 billion annually in E&P capex over a decade, keeping global E&P spending elevated at approximately $600 billion per year through 2035-40. This provides enhanced long-term visibility for the oil services sector, though 2026 revenues will not see immediate impact.
Bernstein identifies a 'Donroe basket' favoring US, oilfield services, and onshore companies. SLB, Tenaris, and Vallourec best fit the criteria and carry Outperform ratings. While short-term oil prices may rise, medium-term oversupply concerns—currently at 3.6 million barrels per day—could resurface. Long-term, cheaper oil may benefit the global economy and support modest demand growth, despite declining oil intensity.