Dallas Fed Survey Reveals Oil Executive Frustration Amid US-Israel-Iran Conflict

The Federal Reserve Bank of Dallas released an updated Energy Survey on Thursday, reflecting volatility caused by the US and Israel's ongoing war with Iran. Among 120 oil and gas executives, 43% expect US production to increase by no more than 250,000 barrels per day (bpd) in 2026, while 17% anticipate a rise of 250,000 to 500,000 bpd. Another 30% foresee no change, and 10% predict an increase exceeding 500,000 bpd, with only 1% expecting a surge above 1 million bpd. For 2027, predictions are more varied: 24% expect no change, 26% see a rise of up to 250,000 bpd, 32% anticipate growth of 250,000 to 500,000 bpd, and 13% forecast an increase of 500,000 to 750,000 bpd.

Regarding employment, 59% of executives expect employee counts to remain stable through 2026, about a third anticipate a slight increase, and only 8% predict a decline. West Texas Intermediate (WTI) futures rose 1.7% to roughly $94.50 per barrel, while Brent futures climbed to nearly $104. The Strait of Hormuz, logjammed since the conflict began, is a key concern: 39% of executives expect traffic to return to pre-war levels by August, 26% by November, 14% by December or later, and 20% as soon as May. However, 48% deem it "very likely" that Hormuz traffic could be disrupted again within five years, with another 38% calling it "somewhat likely."

Most executives anticipate higher shipping costs for Persian Gulf oil post-conflict, including insurance, freight, and tolls. Specifically, 36% expect costs to rise $2 to $4 per barrel, 20% between $4 and $6, and 23% predict a $6 per barrel increase. For Persian Gulf production, 32% believe at least 90% of output will eventually return, another 32% expect full recovery, and 20% anticipate 80% to 90% of pre-war levels.

Anonymous comments reveal frustration with global energy volatility. One executive noted, "With all of the chaos, predicting anything in the energy sector is very difficult." Another highlighted that extreme price volatility leaves exploration and production companies uncertain about increasing spending, citing declining rig counts despite oil above $90 per barrel, indicating "little confidence that prices will hold." This executive added that closing the supply gap from the Iran conflict requires "greater certainty and higher 2027 future prices" to incentivize additional deployments, while keeping supply chain inflation in check. Another commenter observed "increased talk of smaller operators adding rigs" after two months of elevated prices, but noted uncertainty about Persian Gulf production levels post-strait reopening due to infrastructure damage. One executive agreed with the Trump administration's claim that prices will fall quickly after the war, stating, "The price of oil will fall back to the $65-per-barrel level very quickly once this conflict settles down."