By Benoît Morenne
Since the Iran war began, U.S. shale companies have been resisting President Trump's call to add more barrels of oil into a deprived marketplace.
Now, some companies are starting to do just that, most notably Diamondback Energy, one of the top drillers in the Permian Basin. The company told investors this week that the market is sending a clear signal to start cranking out more barrels. EOG Resources and Chord Energy have similarly announced plans to produce slightly more crude than they previously anticipated.
U.S. crude oil futures settled Wednesday at $95.08 a barrel, up 42% from the day before the Iran war broke out.
"We're two months into the world's largest oil-supply disruption in history," Diamondback Chief Executive Kaes Van't Hof told analysts. But he added, "I don't think there's a lot of appetite for something like the go-go days of 2017, 2018," referring to an era when producers spent with abandon to grow at a fast pace.
The planned increases from Diamondback, EOG and Chord are modest and won't do nearly enough to help the world backfill its lost supply from the Middle East. They amount to between 20,000 and 30,000 barrels of oil a day -- a drop compared with the 13 million barrels a day that the closure of the Strait of Hormuz has removed from the global economy.
The additions won't do much to tamp down the steady rise in gasoline prices, either. The average gallon of unleaded was $4.54 on Wednesday, the highest level since 2022.
Thus far, Trump has given his oil allies a break. Although his team has repeatedly discussed ways to increase production with oil executives, the administration understands shale companies need more certainty before they bring barrels online, oil lobbyists say. Yet with the summer driving season only weeks away and no reprieve in sight for drivers, Trump might be tempted to put more pressure on oil producers.
The shale companies' tepid reaction to the jump in crude prices is further proof that firms once known to grow helter-skelter have become disciplined. Although they acknowledge the global economy is facing a historic dearth of crude, they are happy to use their cash to beef up their balance sheets and wait to see where markets land.
Executives at Occidental Petroleum and Devon Energy, two of the largest U.S. oil producers, expressed caution this week about adding new rigs. They noted that a dollar spent today wouldn't translate into production until next year -- and they need to see how the war unfolds before they make a decision to pick up rigs or hire crews that frack wells.
Some noted they now expect higher prices for longer, a signal that they might add more production in the future, but even then, they cautioned that growth wouldn't be explosive.
EOG CEO Ezra Yacob said petroleum stockpiles are being depleted and it would take "a while" to refill them to healthy levels. The market is entering a higher-price environment for the next few years, he said, and EOG could potentially grow production by mid-single-digits.
His tempered stance reflects in part the uncertainty hanging over energy markets.
Iran and the U.S. are working with mediators to restart negotiations to end the conflict, but major disagreements remain, and Trump warned that the U.S. would resume bombing if a deal isn't reached. Meanwhile, the war is forcing countries to draw deep into their oil reserves. Analysts at J.P. Morgan said in a note last week that commercial crude stocks in member countries of the Organization for Economic Cooperation and Development could fall to critically low levels in September if the strait remains closed.
Then, there's the United Arab Emirates' exit from the Organization of the Petroleum Exporting Countries, which could complicate U.S. producers' plans. The abrupt departure didn't have any immediate impacts on markets because the strait remains locked down, but it will eventually create a new source of oil supply that is likely to bring crude prices lower, analysts and executives say.
The country produced about 3.4 million barrels a day at the end of last year, according to OPEC data, but Adnoc, its national oil company, has invested tens of billions of dollars in recent years with a goal to increase its production capacity to about 5 million barrels a day. The U.A.E. has hinted it intends to tap in to this buffer to produce more once the strait reopens, though it isn't clear how much more it can actually produce above current levels.
Unlike the U.S., where shale companies need American oil prices to hover around $60 to justify their investment in drilling, the U.A.E. can produce barrels for cheap. In 2025, it needed an estimated oil price of about $46 to meet its spending needs and balance its budget, according to the International Monetary Fund.
Scott Sheffield, the former chief executive of Permian driller Pioneer Natural Resources, said the U.A.E.'s break from OPEC could eventually lower oil prices, which would have a "significant impact on shale economics."
For now, shale companies are focused on bolstering their balance sheets to weather future oil volatility thanks to a free cash flow windfall. EOG, Diamondback and Occidental collectively logged roughly $4.9 billion in free cash flow in the first quarter, up from $3 billion in the fourth quarter of 2025.
Diamondback said it expects to hit its goal to have net debt of $10 billion in just a couple of months as opposed to its expected 12- to 18-month timeline. It said that if high prices persist, it would allocate less cash to buybacks and more to retire debt. Occidental said higher oil prices are supporting its goal to reduce its principal debt to $10 billion. Chord said it would use its cash bounty to trim its debt.
Van't Hof said he expected mostly private Permian operators to add 20 to 30 rigs this year. This would bring the rig count in the basin to between 261 and 271 rigs -- a level comparable with last summer, according to Baker Hughes data.
"I don't think these companies are going to get reckless," said Gabriele Sorbara, an analyst at financial-services firm Siebert Williams Shank. "They're not the old days."
Write to Benoît Morenne at benoit.morenne@wsj.com
(END) Dow Jones Newswires
May 07, 2026 05:30 ET (09:30 GMT)
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