By Georgina McCartney
HOUSTON, March 10 (Reuters) – A surge in energy prices caused by the U.S.-Israel war with Iran will not lead to additional U.S. oil output without the market predictability needed to ensure more drilling, Andy Hendricks, CEO of oilfield services company Patterson-UTI, said on Tuesday.
Oil prices have swung wildly since the end of February after Iran shut the Strait of Hormuz, a key trade route, forcing major producers in the Middle East to cut production. U.S. crude futures hit $119 a barrel at the start of this week, the highest level since August 2022, and moved within a $35.80 range during Monday’s trading session.
On Tuesday, they settled at $83.45 a barrel, down $11.32, as U.S. President Donald Trump predicted de-escalation. [O/R]
“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,” he said in an interview, adding that it can take more than half a year to bring wells online.
“What is the true price of oil going to be in six to nine months?” he asked.
U.S. oil production is already near record levels, hitting 13.7 million barrels per day last month, according to the U.S. Energy Information Administration. Permian production was at 6.59 million bpd, down from a record 6.74 million bpd hit last year.
Hendricks said the trajectory of U.S. oil production would depend largely on how long it takes the situation in Iran to normalize and trade to resume 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 said.
(Reporting by Georgina McCartney in Houston; Writing by Liz Hampton in Denver; Editing by Bill Berkrot)
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