With developments in the Middle East continuing to impact the global oil market, the Federal Reserve Bank of Dallas took the unusual step of updating its first‑quarter energy survey in April. The update to the last survey issued in March drew responses from executives at 120 oil and gas companies, including 78 exploration and production (E&P) firms and 42 oilfield service companies.
The updated survey results released 23 April show that oil and gas firms remain cautious about the outlook for US oil supply growth, though they see some room for increases. Forty-three percent of respondents said US oil production could increase by as much as 250,000 B/D this year, while 17% expect growth of between 250,000 and 500,000 B/D.
Another 30% said they anticipate no change in the current US production trajectory. Only 1% of respondents said they believe US oil production will rise by more than 1 million B/D.
“Extreme oil price volatility is leaving both small and large E&Ps unsure of whether to increase capital spending and activity. Even after nearly a month of oil above $90[/bbl], rig counts declined, signaling little confidence that prices will hold,” said one of the survey respondents from an oil and gas producer.
Several other E&P executives echoed the sense of uncertainty. One said the situation between the US, Israel, and Iran remains too fluid to assess accurately, adding, “With all of the chaos, predicting anything in the energy sector is very difficult.”
When asked about the outlook for employment at their companies through the end of the year, responses from oil and gas producers were the most cautious. Seventy-three percent of E&P executives said they expect employment levels to remain unchanged, while 17% anticipate a “slight” increase in headcount. Only 1% said employment would “increase significantly.”
Service sector executives expressed a more bullish view with 49% predicting a “slight” increase in employment, while 10% said they expect a “significant” increase. Another 34% said employment levels are likely to remain unchanged.
In written comments, some service sector respondents also highlighted the uncertainty created by the conflict, which remains under a tentative ceasefire. One said unpredictable decision‑making from the White House “makes business modeling near impossible.”
Another service company executive said they expect US oil prices to fall to $70 to $80/bbl once the Strait of Hormuz fully reopens, down from the upper‑$90/bbl range seen recently.
On the timing of a return to normal vessel traffic through the Strait of Hormuz, most respondents leaned toward the second half of the year. Thirty-nine percent said it would happen by August, while 40% said November or later. Only 20% said normal traffic levels would resume by May. The question drew responses from 99 executives.
One E&P respondent summed up the situation by saying that “there is no way to predict the outcome of the war with Iran,” adding, “The effect it will have on domestic oil production depends on how long the strait remains closed, which in turn depends on how long Iran can control movement through the strait.”
Executives were also asked whether they expect the Strait of Hormuz to face further disruptions over the next 5 years, even if the current situation returns to normal. Nearly half of the 112 respondents said future disruptions are “very likely,” while 38% said they are “somewhat likely.” Only 14% said such a scenario is unlikely.
Just over a third of survey participants said the conflict has increased the cost of shipping oil out of the Persian Gulf by $2 to $4/bbl. The survey cited higher insurance premiums, freight costs, and tolls as the primary cost drivers. Another 20% estimated the premium at $4 to $6/bbl, while 23% said shipping costs out of the region have risen by more than $6/bbl.
