Oil and gas firms may be unable to meet President Donald Trump’s call to “drill, baby, drill” this year, as dozens of drilling and exploration executives are now saying they are unlikely to ramp up their operations even as crude prices soar.
A quarterly survey released by the Federal Reserve Bank of Dallas on Wednesday found that, even though prices remain around $100 per barrel, oil and gas executives are wary of drilling new wells amid the war with Iran.
Prices now are far higher than those required by firms to drill profitably — around $66 per barrel — and are even nearly $40 higher than what is required for firms to break even on new projects.
As of Wednesday morning, international benchmark Brent Crude was selling at $100.47 per barrel, while West Texas Intermediate was priced at $88.67 per barrel.
However, roughly half of the exploration and production executives surveyed said the number of wells they expected to drill in 2026 is unchanged.
Only 26% said they expect that number to increase slightly, while 21% said it would increase significantly.
There is widespread agreement among these executives that geopolitical pressure on markets from the war in Iran is keeping them from pursuing new projects, as there is an expectation that prices will fall quickly once peace is agreed to.
“I think our operators are going to take a wait-and-see stance on any increased drilling plans to see how oil and gas prices fare over the next six months,” one executive said in anonymous remarks, noting that the industry will still benefit from the high prices in the short term.
“We could all use what could be a short-term cash flow boost to repair balance sheets, reduce debt, and get caught up on deferred but necessary capital spending, operating spending, and general spending outside of drilling,” the executive said.
Amid the war, thousands of oil and gas tankers have been unable to pass through the narrow Strait of Hormuz, displacing roughly 180 million to 250 million barrels of crude from the worldwide supply. Before the war, 20 million barrels of crude oil and other oil products passed through the strait daily, equivalent to 20% of global oil demand.
This supply disruption has sent shockwaves through global oil markets, sending prices to nearly $120 per barrel at one point.
“The shutting of the Strait of Hormuz causes great uncertainty for the global economy and will ultimately impact our business,” another executive said. “This impact will likely be in multiple ways, including some that we don’t currently foresee.”
Prices began to settle on Wednesday as U.S. officials sent Iran a 15-point plan to end the war, instilling confidence in traders that peace could be on the horizon.
Though there is still widespread agreement, there is still market uncertainty, as even just one post on social media from President Donald Trump can influence prices by up to 10% in either direction.
“The uncertainties are currently off the charts,” another exploration and production executive wrote. “Who knows where we will be later this year?”
These concerns come as the Trump administration has encouraged the industry to increase its operations while prices remain high.
“Markets do what markets do,” Energy Secretary Chris Wright said at the start of CERAWeek by S&P Global. “Prices went up to send signals to everyone that could produce more, please produce more.”
THE REALITY OF TRUMP’S ‘DRILL, BABY, DRILL’ AGENDA
Wednesday’s survey, however, reveals many are hesitant to answer that call.
“The Strait of Hormuz adds complexity,” another executive said. “Suppliers are already trying to increase pricing, and the administration continues to try and talk down [oil] prices. How sustainable are current oil prices? Hard to make long-term commitments or to ‘drill, baby, drill.’”
