U.S. Oil Executives Forecast Modest Production Growth Amid Iran Conflict Uncertainty

The Dallas Fed Energy Survey of 124 oil and gas firms (June 9-17) shows U.S. producers expect a 2-3 % output rise. The business activity index rose to 46.1, its highest since Q2 2022, and the oil production index increased from zero to 15.0.

Oil and gas expansion gains momentum; outlooks improve but cost pressures grow

The survey period overlapped U.S.–Iran negotiations that yielded a June 17 memorandum of understanding to end hostilities. Executives said President Donald Trump’s social-media remarks created “whiplash” for markets, complicating medium-term planning. Uncertainty remains over Strait of Hormuz traffic and Iran’s commitment to the deal.

Bloomberg

Cost pressures surged: oilfield-service input-costs rose from 34.9 to 64.4 and E&P development costs climbed to 40.0. Capital spending rebounded, with the capital-expenditures index at 40.9 and 49 % of firms raising outlays, while the expected-next-year index stayed at zero. Supplier-delivery times lengthened, with 36 % reporting delays. Executives forecast WTI at $81 /barrel by year-end (range $60-$150), $78 /barrel in two years and $82 /barrel in five years; Henry Hub natural-gas is expected at $3.36/MMBtu, rising to $4.14/MMBtu. The operating-margin index turned positive.

Oil and gas expansion gains momentum; outlooks improve but cost pressures grow

White House spokeswoman Taylor Rogers said President Trump is “rolling back burdensome Biden regulations to unleash American energy” and that “short-term, temporary disruptions to energy markets will end once the Iran situation is resolved and traffic in the Strait normalizes.” Dallas Fed senior economist Kunal Patel noted that “internally, we are expecting 2 to 3 % growth in production” and highlighted the sharp rise in cost indexes.

Bloomberg

Respondents called the administration’s messaging erratic and untruthful, saying frequent tweets create market volatility that cannot be priced. They also doubted Iran’s willingness to honor any agreement, labeling compliance “wishful thinking.”

Bloomberg

• “The prospect that Iran will comply and conform with any agreement, written or oral, is, at best, wishing on a fantasy.” — Anonymous respondent

Bloomberg

• “Markets can price risk, but they can’t price a tweet.” — Anonymous oil-shale executive

Bloomberg

• “The whiplash from diplomacy-by-social-media has become the single most unpredictable input in our planning.” — Anonymous oil-shale executive

Bloomberg

• “Under the current conditions with the Iranian war, it is hard to predict the price of crude oil with any amount of certainty.” — Anonymous executive

Bloomberg

Price forecasts span $60-$150 for year-end WTI, showing divergent views on the war’s impact. The operating-margin index turned positive, yet the outlook-uncertainty index remains at 29.9, indicating lingering doubt. The survey provides no actual Q2 production data, limiting verification of the 2-3 % growth estimate.

Oil and gas expansion gains momentum; outlooks improve but cost pressures grow

Executives expect continued volatility, with higher crude and natural-gas prices for months even if a ceasefire holds. Monitoring Iran’s compliance with the June 17 MOU and any further White House statements will shape production and investment decisions.

Bloomberg