US oil and gas officials expect traffic through the Strait of Hormuz to remain disrupted until August, according to a survey by the Federal Reserve Bank of Dallas – with little change in US crude oil production to offset the decline in Middle East oil.
most officers The survey was released on Thursday He also said he expects the cost of shipping oil from the Persian Gulf to rise even after the US war with Iran ends due to higher insurance rates and tolls.
The results indicate the oil and gas industry is skeptical of the Trump administration’s assurances that the Strait of Hormuz, a key chokepoint for about 20 percent of the world’s global oil supply that Iran has effectively closed, will reopen soon — or that oil markets will return to normal soon thereafter. U.S. benchmark crude oil prices stood at $94 a barrel on Thursday, about $30 higher than when the bombings began nearly two months ago.
anonymous responses The survey of 116 executives in the Dallas Fed district of Texas, southern New Mexico and northern Louisiana – the heart of the US energy industry – reflects the region’s growing frustration with the Trump administration over increased shipping costs due to uncertainty and conflict.
An exploration and production company executive said, “The administration’s comments about the ‘Iran terror premium’ that has existed for decades with the price of crude oil are ridiculous.” “But now the administration has created a space where it didn’t exist before.”
Only 20 percent of respondents said they expected shipping traffic through the Strait of Hormuz to “return to normal levels” by May. Late summer or even fall was the most common view — 39 percent said August and 26 percent said November — while 14 percent predicted it would take even longer.
And even when the fighting ends, officials said it will take much longer than the White House predicted to restore the energy sector in the Middle East.
Another respondent said, “Closing production in the Persian Gulf will eventually rise above pre-war levels, but it will take time.” “This is not a quick return to production.”
Forty-eight percent of respondents said it was “very likely” that geopolitical events would disrupt the Strait of Hormuz again in the next five years, while another 38 percent said it was “somewhat likely”.
The industry also expects to continue paying more for ships from the Persian Gulf once the war ends. 79 percent of respondents expected higher insurance, freight costs and tolls to add at least $2 per barrel to shipping costs.
White House spokeswoman Taylor Rogers pointed to some of the more optimistic responses in the survey, saying it “underscores what the president has been saying all along.”
“Once this conflict subsides, oil prices will very quickly return to the $65 per barrel level,” an industry executive said. Another said that “recent events are temporary.”
“The President drove oil and gas prices to multi-year lows at record speed, and as traffic returns to normal in the Strait of Hormuz, energy prices will once again be low,” Rogers said in a statement. “President Trump has been clear that these are short-term, temporary disruptions, but the United States has maintained control as Operation Economic Fury continues to depress Iran’s economy and give the Iranian regime little flexibility.”
The White House and Cabinet members have repeatedly pressured oil and gas executives to increase production in response to higher prices and reduced supply. But surveys indicate industry executives are wary of increasing their drilling while prices are rising wildly.
One respondent said, “Extreme oil price volatility is making both small and large (exploration and production companies) uncertain whether to increase capital spending and activity.” “Closing the supply gap from the Iran conflict will require more certainty and higher futures prices to 2027 to encourage additional rig and frac deployments.”
Most respondents — 73 percent — said they expect U.S. oil production to rise by less than 250,000 barrels per day this year, a relative drop in the bucket compared to the loss. Research firm Rystad Energy said last week it was tracking about 12.4 million bpd less oil production in the Persian Gulf.
Half of the respondents said they expected less than 250,000 bpd of additional US production in 2027 due to higher prices due to the war, while 24 percent expected no change in production. Thirty-two percent said production would fall by more than 250,000 bpd but less than 500,000 bpd next year.
Current US crude oil production is close to 13.6 million bpdThat’s down about 225,000 bpd from the beginning of the year, according to the U.S. Energy Information Administration, the Energy Department’s independent statistical arm.
Another reason for hesitation in increasing production is the possibility that higher prices and the risk of supply disruptions might push countries to turn to alternative energy sources, an oil field services official said.
“Uncertainty in the oil and gas business is problematic and this administration is the definition of uncertainty,” the executive said. “I expect material demand to decline in the long term as many societies will no longer see hydrocarbons as a certainty for future growing energy needs.”
