Oil execs say war is ‘wreaking havoc’ on commodities markets

In a Dallas Federal Reserve energy survey released Wednesday, one oil and gas company executive expressed guilt for profiting off oil prices driven up by the latest Middle Eastern war. Another called volatility in commodities markets “insane” and said the U.S.-Israel conflict against Iran makes planning difficult.

“It feels as though we’ve lost control of the Iran war,” said another executive. “ … If the (Strait of Hormuz) doesn’t open in the next two weeks, we think you’re looking at $170 per barrel and basically guaranteed recession.”

Business activity in the first quarter of this year was up in the Texas-New Mexico oilfields from the end of 2025, the Fed’s report said. The bank reported that its business activity index — a broad measure of the conditions energy firms face in the region — “turned positive,” indicating expansion. The index increased from -6.2 in the fourth quarter of 2025 to 21.0 in the first quarter of 2026.

While the pumpjacks keep churning in the Permian Basin, executives expressed broad uncertainty about how the Iran war — and not to mention other conflicts like the Russia-Ukraine war — will impact the global economy.

In a special questions section, oil and gas executives provided anonymous commentary. Many of them described how global geopolitical turmoil is affecting domestic oil and gas markets. Some said even if their companies profit from higher energy prices, a recession caused by those prices would ultimately be bad for business.

The bank survey covered the Federal Reserve’s 11th District, which includes Texas, southern New Mexico and parts of Louisiana.

“I don’t like profiting from a war,” one oil executive told the Fed’s economists. “I didn’t choose this, and it feels awful. I hope a better Iran comes from the ashes, but we don’t have a good track record there.”

More than 40% of executives from 131 oil and gas firms said they expect the average price of a barrel of West Texas Intermediate in 2026 to be between $70 and $79.

One executive praised President Donald Trump’s announcement of the opening this year of the nation’s first new oil refinery in 50 years. A company called America First Refining will build the facility in Texas’ southernmost tip, in Brownsville.

But, the executive added, “the war in Iran is wreaking havoc in industry.”

The survey also illustrates that economies of scale reign in Permian, where larger operators represent 80% of production.

There are 30 publicly listed independent energy companies with market capitalizations over $1 billion, according to the survey. Firms that produce over 100,000 barrels of crude oil daily can cover operating expenses for existing wells at prices as low as $32 per barrel. Operators that pump fewer than 10,000 barrels daily need prices of at least $46 per barrel to cover costs.

On costs, smaller exploration and production companies face challenges in competing with the international oil majors such as Exxon Mobil, which extracted the equivalent of 1.6 million barrels per day from the Permian in 2025, raking in $6.5 billion in profits for the year. But the Fed’s survey indicates smaller companies have more agility to respond to price increases.

“Executives at small (exploration and production) firms were more likely than their counterparts at large firms to indicate they increased the number of wells they plan to drill since the beginning of the year,” the survey says. Twenty-nine percent of small exploration and production companies say they will significantly increase production.

Break-even prices for all firms averaged $67 per barrel, 3% higher than last year.

But the wars make predicting prices difficult.

“The uncertainties are currently off the charts,” an executive told the Fed. “Who knows where we will be later this year?”

Justin Horwath covers tech and energy for the Journal. You can reach him at jhorwath@abqjournal.com.