Is U.S. Shale Responding to US$90 Crude Oil?

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

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Summary

U.S. crude oil priced at US$90 per barrel could support an industry working to recover from last year's lower-for-longer market outlook. But be mindful of irrational exuberance, officials say.

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Is War Good for the Oil Sector?

U.S. crude oil prices near US$90 per barrel, supported largely by a geopolitical risk premium, may be incentivizing upstream activity, industry comments suggest.

According to Industrial Info Resources Data, there are US$3.4 billion worth of projects related to oil and natural gas in North Dakota.

Industrial Info Resources has been monitoring events in the Middle East since fighting began February 28 with joint U.S.-Israeli strikes on Iran. A running list, including curtailments at a Pakistan refinery due to supply-side issues stemming from the war, shows the regional issues that are driving the price of crude oil higher.

In North Dakota, operators had responded early. Nathan Anderson, the director of the North Dakota Department of Mineral Resources, said he expects to see a steady increase in production. Month-on-month production to February increased 4,000 barrels per day (bpd) to reach 1.13 million bpd, a trend he said should continue through March data.

"When the Iran conflict happened, those operators that had curtailed or shut in production during the low-price environment started to bring that production online," he said.

As of Wednesday, there were 32 active rigs in North Dakota, compared to 22 at the same time last year. West Texas Intermediate (WTI), the U.S. benchmark for the price of oil, was trading at around US$91 per barrel on Wednesday, compared to US$63.48 on this date in 2025.

It can take months for rigs to translate to production. Anderson in North Dakota cautioned that operators, however, may be getting ahead of themselves.

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

Some energy company executives had expressed caution about responding too early to the war premium, questioning the market and political outlook once the dust eventually settles. In its monthly market report for April, the U.S. Department of Energy said it expected WTI to average US$87.41 per barrel, up US$13.80 from the March forecast. Total crude oil production, however, is only expected to increase by 0.2% from year-ago levels to average 13.61 million bpd.

In April, state officials said the break-even price for crude oil production from the Bakken shale is between US$50 and US$60 per barrel.

Cautious Optimism from Upstream

Upstream, oil field services firm Halliburton is one of the first out of the gates with its earnings report for the first quarter. Total revenue of US$5.4 billion was relatively unchanged from year-ago levels, while operating income of US$679 million marked a 57% improvement over year-ago levels.

A lower-for-longer outlook for crude oil prices took a toll on the energy sector last year. Jeff Miller, the company's top executive, said last year that he expected the oil field services industry would be softer than initially expected.

This year, North America revenue still declined 4% year-on-year to US$2.1 billion, driven by a decline in upstream activity. Miller, however, was nevertheless optimistic.

"In North America, I see clear signs that we are in the early innings of a recovery," he said.

International revenue increased 3% annually, with much of the support coming from Latin American operations.

By the Numbers

• 4% year-on-year decline in Halliburton's North American revenue
• 13% upward revision for U.S. crude oil prices by the U.S. Department of Energy

Key Takeaways

• Shale could be ready to respond to war premium on oil prices.
• It'll take months for new rigs to translate to new production.
• Oil is priced well above the US$60 break-even for Bakken crude.
• Halliburton said North America is primed for a rebound.

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).