Q1 Dallas Fed Energy Survey Gets Update

The first quarter Dallas Fed Energy Survey has received an update “in response to recent developments in the global oil market”, a statement sent to Rigzone on Thursday by the Dallas Fed team revealed.

In this update, participants were asked, “by when do you expect traffic through the Strait of Hormuz to return to normal levels”. Executives from 99 oil and gas firms answered this question during the survey collection period, which spanned from April 15 to April 20, with 39 percent of those revealing that they expected a return to normal by August, the update outlined.

According to this survey update, 20 percent see a return to normal by May, 26 percent see a return to normal by November, and 14 percent expect a return to normal even later than that.

“Executives expect traffic through the Strait of Hormuz to eventually normalize, although most believe it will take time,” the update noted.

The update also asked participants, “once traffic in the Strait of Hormuz returns to normal levels, how likely is it that geopolitical events will disrupt it again within the next five years”. Executives from 112 oil and gas firms answered this question during the survey collection period, with 48 percent of those stating that it is “very likely”, the update outlined.

Thirty-eight percent said it is “somewhat likely” and 14 percent said it is “unlikely”, the update showed.

“A majority of executives say future disruptions to the Strait of Hormuz are likely,” the update highlighted.

The update went on to ask participants, “by how much do you expect the cost of shipping oil from the Persian Gulf (insurance, freight costs, tolls) to increase in dollars per barrel once the military conflict ends, compared to before the war”.

Executives from 70 oil and gas firms answered this question during the survey collection period, with the most selected response being “more than $2 but not more than $4”, the update outlined. The second most popular response was “more than $6”, the third most popular response was “more than $4 but not more than $6”, and the fourth most popular response was “more than $0 but not more than $2”, according to the update, which revealed that the least popular response was “$0”.

In a survey update respondents comments section, one exploration and production firm executive said “the geopolitical events are too chaotic to provide any degree of certainty to commodity pricing or unimpeded transportation through the Strait of Hormuz at this time”.

“I am of the opinion that the costs related to shipping oil from the Persian Gulf will increase, but by how much I am not sure,” the executive added.

“I am not optimistic that the Iran conflict will cease in the near future,” the executive continued.

An oil and gas support services firm executive warned in the comments section that “the disconnect between spot prices and midstream feasibility is widening”.

“Extended lead times for pipeline products and significantly increased transportation costs, both exacerbated by the shipping crisis in Hormuz, have turned our 12-month projections into logistical jigsaw puzzles,” the executive added.

The update noted that survey participants were given the opportunity to submit comments on any special questions or on any current issues that may be affecting their businesses. Some comments were edited for grammar and clarity, the update pointed out.

The Dallas Fed states on its website that it conducts a quarterly survey of about 200 oil and gas firms located or headquartered in the Eleventh District which operate regionally, nationally or internationally. The site highlights that the Eleventh District comprises Texas, southern New Mexico, and northern Louisiana.

“The information collected is a valuable component of economic analysis and serves as input for Federal Open Market Committee monetary policy deliberations,” the Dallas Fed states on its site.

To contact the author, email andreas.exarheas@rigzone.com