Oil Executives Predict Another Dull Year In 2026

December 17, 2025

The latest survey by the Federal Reserve Bank of Dallas has revealed lingering pessimism in oil markets, with executives seeing lower activity and higher costs amid weak oil prices, but AI is offering hope for improved efficiency.

Activity in the oil and gas sector fell in the final quarter of the year with the business activity index remaining negative at -6.2, unchanged from the third quarter.The company outlook index improved slightly to -15.2 from -17.6 in the third quarter, suggesting continuing pessimism among firms.

Oil and gas production was little changed in the fourth quarter, according to executives at exploration and production firms. The oil production index also remained in the negative, though it advanced to -3.4 from -8.6 in the third quarter, while the natural gas production index increased to 0 (neutral) from -3.2 the previous quarter.

The biggest takeaway, however, was that oil executives expect oil markets to remain depressed, with respondents projecting West Texas Intermediate (WTI) oil prices to finish 2026 at $62 per barrel, lower than the average of $65.32 per barrel that the EIA has projected for 2025. 

They expect oil markets to be oversupplied in 2026 if the Trump administration succeeds in ending the Ukraine conflict and Russian sanctions are lifted; however, if Russian sanctions continue, along with reduced oil volumes from Iran and Venezuela, markets may approach a balanced position.

The energy leaders are more bullish about longer-term expectations, predicting WTI prices to average $69 per barrel in 2027 and $75 per barrel by 2029/2030.

On a more positive note, the executives have reported that AI is helping reduce effective well costs through broad productivity gains, faster task completion, and fewer overlooked items.

The majority of oil & gas support services firms (nearly 60% combined) expect AI to slightly or meaningfully increase equipment lifespan, while 39% don’t foresee an impact. Meanwhile, nearly 80% do not expect AI to replace personnel in their firms over the next five years, with similar sentiments across small E&P, large E&P, and support services firms.

Oilprice.com …except images