Business Activity Picks-Up in Q3 Despite Rising Uncertainty

Activity in the oil and gas sector across Texas, southern New Mexico, and northern Louisiana picked up in the third quarter of 2026 according to oil and gas executives responding to the Dallas Fed Energy Survey.

Activity is tracked using the business activity index, as shown in the chart above, which is calculated by subtracting the percentage of respondents who report a decrease in activity from the percentage of respondents reporting an increase. This quarter, the index remained fiercely positive at 38.8 but fell from 46.1 in Q2.

Although business activity is similarly scored by both E&P firms and O&G Services firms, there were stark differences in how both sectors reported on their uncertainty and company outlooks, as shown in the chart below.

On the company outlook side, E&P firms reported a more significant increase in confidence this quarter than O&G services firms, with index scores of 50 and 4.6, respectively. This divergence likely reflects elevated commodity prices extending into late 2026, which benefit E&P companies more directly than service providers. Uncertainty indices showed a similar divergence, with E&P executives registering a score of 40.2, compared to just 9.5 for oil and gas services firms. Much of this uncertainty among E&P executives likely stems from the difficulty of forecasting future WTI prices.

When asked about expectations for WTI pricing, most executives expect price to remain at elevated levels throughout the next five years, but a wide range of estimates for price levels exists. For example, the average estimate for WTI prices in six months is $88/Bbl, with actual estimates ranging from $65-$130/Bbl. The wide range in price expectations reflects uncertainty around normalization of flows and production out of the Middle East. When asked “By the end of which quarter do you expect crude oil exports from the Persian Gulf to return to normal levels?”, there was no clear consensus among respondents. Between 20-30% of respondents answered both “Q2 2027” and “2028 or Later”, with all other quarters between now and 2028 expected by between 5% and 20% of executives.

Company executives are reporting higher levels of business activity and a more optimistic outlook for their firms. However, rising uncertainty continues to cloud the outlook as businesses enter Q4 and look ahead to 2027.