Key Takeaways
- U.S. oil executives anticipate a modest production rise in 2026 and 2027 as a response to the Iran conflict, even though the war’s outcome remains uncertain.
- The Dallas Fed Energy Survey, updated after recent market turbulence, gathered responses from 115 firms, with the most common 2026 increase estimate falling between 0.01 – 0.25 million barrels per day and the most common 2027 estimate between 0.26 – 0.50 million barrels per day.
- Survey comments reveal concerns over extreme price volatility, the disconnect between paper and physical oil markets, and the difficulty of planning capital budgets amid rapidly shifting market conditions.
- While a minority of respondents predict “no change,” the majority view the current price environment—particularly sustained Brent levels above $90 per barrel—as insufficient to trigger a sizable supply response on its own.
- The Energy Information Administration (EIA) continues to publish independent monthly forecasts, projecting U.S. crude output of roughly 13.5 million barrels per day in 2026 and 13.95 million barrels per day in 2027, reflecting only incremental growth.
- Respondents emphasize that long‑term supply decisions hinge on the duration of the Strait of Hormuz closure and on achieving clearer price signals that would justify additional rig and fracking deployments.
Executive Expectations The first‑quarter Dallas Fed Energy Survey, released on Thursday, updated its assessment “in response to recent developments in the global oil market.” The revision prompted 115 oil‑and‑gas firms to answer the question: “By how much do you expect U.S. oil production to increase in response to the Iran war in 2026 and 2027?” Analysis of the replies showed that the most frequently selected increase for 2026 was “more than 0 but not more than 0.25 million barrels per day,” while the top answer for 2027 was “more than 0.25 million but not more than 0.50 million barrels per day.” The next two most common choices for 2026 were “no change” and “more than 0.25 million but not more than 0.50 million barrels per day,” whereas the second‑most common response for 2027 was “more than 0 but not more than 0.25 million barrels per day” and the third‑most common was “no change.” These patterns indicate that executives are cautiously optimistic about modest output gains, but they are far from unanimous on the magnitude of those gains.
Survey Methodology and Respondent Comments
Survey participants were offered a comment box where they could discuss special questions or broader issues affecting their businesses; all remarks were later edited for grammar and clarity. One exploration‑and‑production (E&P) executive wrote that “extreme oil price volatility is leaving both small and large E&P firms unsure of whether to increase capital spending and activity.” He added that “even after nearly a month of oil prices above $90 per barrel, rig counts have declined, signaling little confidence that prices will hold.” Another executive argued that “the difference between paper market oil prices and substantially higher physical prices sends conflicting signals to operators who cannot plan rigs and capital budgets when prices swing wildly based on tweets,” and that “the paper market appears to be manipulated, likely leading to a worse supply‑demand imbalance and higher prices in the medium term.” A third E&P respondent noted that “the effect of the Iran war on domestic production depends on how long the Strait of Hormuz remains closed, and that is how long Iran can control the movement of oil.” Finally, a support‑services executive observed that “approximately 45 days of West Texas Intermediate above $75 per barrel have prompted smaller operators to talk about adding rigs and larger independents to move up drilling schedules.”
Industry Forecasts and External Perspectives
When contacted, the American Petroleum Institute (API), the U.S. Department of Energy (DOE), the U.S. Energy Information Administration (EIA), and the Iranian Foreign Ministry declined or had not yet responded to requests for comment. The EIA, however, reminded Rigzone of its monthly Short‑Term Energy Outlook (STEO) reports, which independently forecast near‑term U.S. output without prior government approval. In its April STEO—finalized on April 6—the EIA projected U.S. crude production, including lease condensate, to average 13.51 million barrels per day in 2026 and 13.95 million barrels per day in 2027. This forecast represents a slight increase over the March STEO, which had estimated 13.61 million barrels per day for 2026 and 13.83 million barrels per day for 2027, with both years also showing an average of 13.59 million barrels per day for 2025. The EIA stresses that its data and analyses are independent and that its views do not necessarily reflect those of the DOE or other federal agencies.
Implications for Production Planning
The survey’s mixed responses underscore a broader uncertainty that shapes investment decisions across the sector. While many executives see the current price environment as a trigger for modest production gains, they also stress that sustained, predictable price levels are essential to justify new rig deployments and to alleviate supply‑chain inflation pressures. The possibility of an extended Strait of Hormuz closure adds a geopolitical variable that cannot be ignored when projecting output, as it directly influences the capacity to move Iranian crude and thus affects global supply balances. Consequently, firms are likely to adopt a cautious stance, focusing on securing clearer market signals before committing significant capital to expanded drilling schedules.
Conclusion
Overall, the updated Dallas Fed Energy Survey reveals that U.S. oil executives expect a modest, incremental rise in production in the wake of the Iran conflict, with the most common increase estimates hovering around a quarter of a million barrels per day by 2027. However, volatility in both paper and physical oil markets, combined with geopolitical uncertainty, tempers enthusiasm and leads many firms to remain hesitant about committing to substantial capital spending. As the EIA’s independent forecasts show only modest growth, the industry’s near‑term production outlook will likely be shaped more by price stability and geopolitical developments than by any dramatic surge in U.S. output.