Dallas Fed survey: War uncertainty capping firms’ ambitions
Seven out of 10 oil-and-gas executives surveyed by the Federal Reserve Bank of Dallas think the price of a barrel of West Texas Intermediate (WTI), which flirted with $100 in the last 2 weeks, will finish 2026 below $80. But with the war with Iran “wreaking havoc” in commodity markets, most firms aren’t rushing to overhaul their 2026 production plans.
Fed researchers’ quarterly survey of industry players from about 130 companies in Texas and parts of Louisiana and New Mexico showed that the average WTI price forecast for year-end is around $74. That’s up significantly from the $62 outlook from 3 months ago and well below the roughly $94/bbl at which WTI was being priced during the Fed’s survey period earlier this month. At $74, WTI would also be at a price high enough for most production to be profitable.
But the spike in uncertainty from the conflict in the Middle East means most executives are being sober about their options in coming months. This quarter’s survey showed a sturdy uptick in its overall outlook score as well as in companies’ activity but executives and exploration and production firms said that, in the aggregate, they’re not ramping oil production and are seeing their people and development costs climbing.
The potential that commodity price spikes will prove transitory and thus be a limiter on investment and output growth was a theme in executives’ anonymous comments to the Fed. For example:
- “All pricing is uncertain until safe navigation through the Strait of Hormuz can be achieved. I would think any short- or long-term planning has been put on hold for the next 2-3 months.”
- “How sustainable are current oil prices? Hard to make long-term commitments or to ‘drill, baby, drill.’”
- “Conflict with Iran makes everything a wild card.”
- “Our current capital spending is based on minimum volume commitments we are required to deliver. Changes in prices will not affect our capital spending.”
Executives are more positive about the mid- and longer-term price outlook for natural gas than they are for oil. While their average WTI price forecast for the next 2 years is $73/bbl and the 2031 forecast climbs to $79, industry players think Henry Hub natural gas prices will climb from the $3.16/MMbtu during the survey period to $3.72 in 1 year, $4.03 in 2 years, and $4.42 in 5 years. That 5-year forecast is some 40% higher than today’s levels.
“With demand rising for electrical use by data centers and artificial intelligence, along with the administration’s tariff policy that is bringing in manufacturing from outside our country, I feel strongly that natural gas demand will increase,” one survey respondent said. “LNG exports will place a huge demand for natural gas. I am more bullish on natural gas pricing than oil pricing.”
For more details from the survey, click here.
About the Author
Geert De Lombaerde
Senior Editor
A native of Belgium, Geert De Lombaerde has more than two decades of business journalism experience and writes about markets and economic trends for Endeavor Business Media publications Healthcare Innovation, IndustryWeek, FleetOwner, Oil & Gas Journal and T&D World. With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati and later was managing editor and editor of the Nashville Business Journal. Most recently, he oversaw the online and print products of the Nashville Post and reported primarily on Middle Tennessee’s finance sector as well as many of its publicly traded companies.