Energy market volatility driven by escalating Middle East conflicts won’t translate into increased American oil drilling, according to the head of a major oilfield services firm.
Andy Hendricks, chief executive of Patterson-UTI, explained Tuesday that companies need market stability to justify ramping up production, despite crude prices reaching $119 per barrel earlier this week – the highest point since August 2022.
The dramatic price swings began in late February when Iran blocked the Strait of Hormuz, a critical shipping channel that forced Middle Eastern oil producers to slash output. During Monday’s trading alone, oil prices fluctuated within a $35.80 range before settling Tuesday at $83.45 per barrel, dropping $11.32 as President Donald Trump forecasted reduced tensions.
“The challenge is in December, when we and the oil and gas companies we work for were all working on our budgets, oil was in the $50s,” Hendricks explained during an interview, noting that bringing new wells into production requires more than six months.
“What is the true price of oil going to be in six to nine months?” he questioned.
American oil output currently sits near historic highs at 13.7 million barrels daily last month, based on Energy Information Administration data. The Permian Basin produced 6.59 million barrels per day, slightly below last year’s peak of 6.74 million barrels daily.
According to Hendricks, future US production levels will largely depend on how quickly Iranian tensions ease and normal shipping resumes through the Strait of Hormuz.
“I think the risk is that Permian oil production starts to slow this year. If it does slow this year that will probably cause prices to move up and then that will cause the industry to start to pick up activity,” he stated.
