Dallas Fed Survey: War Creating Energy Sector Chaos

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Written by Daniel Graeber for IIR News Intelligence (Sugar Land, Texas)

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Summary

Respondents to the latest quarterly survey from the Federal Reserve Bank of Dallas aren't thrilled with market volatility stemming from war in the Middle East.

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Tough to Make Plans in Current Climate

While conflict in the Middle East is leaving crude oil prices well above the break-even point for many shale drillers, volatility in the global energy sector is creating chaos in the industry, according to the results of a Federal Reserve Bank of Dallas survey.

The Dallas Fed covers the Eleventh Federal Reserve District, which includes Texas, northern Louisiana and southern New Mexico. According to Industrial Info Resources data, there are 184 active capital Oil & Gas Production projects in Texas alone, with a total investment value of $159.4 billion.

Industrial Info Resources has been tracking the impact on the global energy sector since U.S-Israeli airstrikes on Iran began in late February. Even Pakistan is dealing with refinery issues. Attock Refinery Limited shuttered its Rawalpindi Refinery on Wednesday because of supply disruptions stemming from the war. Subscribers to the Industrial Info Resources Global Market Intelligence (GMI) Petroleum Refining Plant Database can view a detailed profile of the refinery.

Markets, meanwhile, have whipsawed in response to on-again, off-again peace negotiations meant to re-open the Strait of Hormuz. West Texas Intermediate (WTI), the U.S. benchmark for the price of oil, was trading around $93 per barrel on Thursday. It was trading at $67 per barrel before the conflict began and reached as high as $112.95.

"Extreme oil price volatility is leaving both small and large E&Ps (exploration and production firms) unsure of whether to increase capital spending and activity," one respondent told the Federal Reserve Bank of Dallas in its first-quarter energy survey. "Even after nearly a month of oil above $90 per barrel, rig counts declined, signaling little confidence that prices will hold."

Upstream services firm Baker Hughes put the U.S. rig count at 543 on April 17, when WTI was priced at $83.85 per barrel. That's down by 42 rigs from the same period last year, when WTI was trading at $65.07 per barrel.

Shale drillers need oil priced at around $50 per barrel in most cases to make a profit. On Thursday, IIR News Intelligence reported that some optimism was emerging in response to higher crude oil prices. See April 23, 2026, article - Is U.S. Shale Responding to US$90 Crude Oil?

Elsewhere, Nathan Anderson, the director of the North Dakota Department of Mineral Resources, said the geopolitical premium supporting crude oil prices was enough for operators to dust off work that was shut-in last year, though he cautioned about over-reacting.

"I think operators are cautious to pick up rig activity because they don't understand the duration of this," he said.

The Dallas Fed reported that 39% of those surveyed said they expected the Strait of Hormuz to remain closed through August, while only 20% said it would open by next month. A minority said the closure could last through November.

By the Numbers

• 39% of respondents think the Strait of Hormuz will open by August
• 42 fewer rigs in service than this time last year

Most of the survey respondents said they expected domestic production to increase because of the risk premium. Just over 40% of the respondents said, however, the increase wouldn't be more than 250,000 barrels per day (bpd).

In its monthly market report for April, the U.S. Energy Information Administration forecast an increase in total crude oil production of just 20,000 bpd from year-ago levels.

Frustration Mounting over Middle East Conflict

Other respondents said they were just plain fed up with U.S. President Donald Trump's foreign policy strategy.

"If the administration feels that we need to prolong the conflict, it needs to better articulate the long-term strategic goal and the risk of inaction," one said.

Trump has alternated between threats to eliminate the Persian civilization and wiping out Iran's power infrastructure to saying both sides agreed to a truce that would allow maritime traffic to move through the Strait of Hormuz.

Iran on Wednesday fired on three vessels in the region, while the U.S. military boarded an Iranian tanker. Elsewhere, the U.K. Maritime Trade Operations Center reported Thursday that a cargo vessel was approached by two small vessels from Somalia with armed personnel onboard. Both ships exchanged fire, although the crew of the cargo vessel were safe.

Key Takeaways

• Energy industry frustration is mounting over war volatility.
• The industry needs to see a plan if the conflict drags on, a respondent told the Dallas Fed.

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About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).