Iran War Chaos Drives Oil Price Volatility, Sowing Frustration Among Shale Executives

Energy executives in the US are expressing frustration over their inability to plan for the future due to chaos and instability in global crude prices caused by the war in Iran. The Federal Reserve Bank of Dallas released a report on September 30, which included anonymous comments from energy executives who pointed out that wide swings in oil prices were the main source of their unease. Some respondents blamed the Trump administration's policies, saying 'My oil price crystal ball broke when the administration first hit Iran.' Another respondent stated, 'Decisions by the executive branch of our federal government seem to be driven primarily by concerns over midterm election results.'

The US benchmark for oil, West Texas Intermediate (WTI), has climbed about 36% since late February. Executives in the latest survey now expect U.S. crude to average $82 within a year's time, up 5% from year-out projections in the report three months earlier.

While oil activity is up in the region, it's not at levels reached in the second quarter, and there are some indications that output is being capped by higher costs, according to Kunal Patel, a senior business economist at the bank. 'It could be that what is somewhat limiting the increase in activity is just the constraints of trying to get more and more goods to the oil field, getting more and more labor, getting more and more rigs,' Patel said.