U.S. oil producers may hold off on cashing in on higher prices

It’s hard to keep track of the economic repercussions of the War in the Middle East – oil prices have been rising and falling based on the latest news. Whether prices are $100 or $80 a barrel, they’re still higher than they would be without any war at all, and that means more cash in hand for U.S. oil producers.

But will that money go towards increasing U.S. oil production?

When oil prices move higher, it’s often a signal to drill, baby, drill. But this case is different, according to Dan Pickering, chief investment officer at Pickering Energy Partners.

“This is a most likely a transitory event, with the war in Iran, and prices [are] likely to come back down,” he said.

U.S. producers don’t want to spend money to up their oil production based on conflict-dependent prices, he said. “It's not like turning the taps. There are no easy inventory of wells to turn on, and so we have to drill them, and that's going to take a number of months.”

But even after the conflict ends, Energy Intelligence director Abhi Rajendran said prices are likely to linger higher than what they would have been without any war. That could mean that U.S. production doesn’t decline, like he expected it to in 2026.

“What you may see now is that maybe a little bit more growth in the Permian, and maybe less declines elsewhere, and so the net effect is actually you see something that's like more flattish,” he said.

Or, Rajendran added, there’s a chance we could actually see overall U.S. production grow later this year.