Impact of Market Volatility on Oil Prices

According to industry experts, the lower bound of oil prices is likely to remain high until the end of the year due to ongoing volatility driven by the conflict between the US and Iran. These conclusions were presented in the quarterly report of the American shale company Diamondback Energy.

Production Growth and Use of DUC Reserves

Texas-based Diamondback Energy increased its production in the second quarter by utilizing its reserves of drilled but uncompleted wells (DUC). The company’s daily output reached a record high of nearly 1.02 million barrels of oil equivalent, including 525,000 barrels of oil.

The active use of DUC reserves occurred against a backdrop of high market volatility, which led to a reduction in global inventories and a rise in prices.

Price Dynamics and Financial Performance

The average oil price for Diamondback in the second quarter was nearly $97 per barrel, $24 higher than in the first quarter and $34 more than the same period last year.

According to the company, the decline in global oil inventories should eventually be replaced by recovery, but the timeline for supply normalization remains uncertain. Structurally, this has raised the lower bound of oil prices compared to pre-conflict levels.

Updated Forecasts and Profit

Diamondback raised its oil production forecast for 2026 by 2,000 barrels per day to 522,000 barrels. The overall forecast for oil equivalent production was increased by 28,000 barrels per day to 1 million barrels. The capital expenditure forecast remained unchanged at around $3.9 billion.

In the second quarter, the company posted a profit of $1.88 billion, more than double the figure for the same period last year. Net earnings per share reached $6.65, exceeding analysts’ expectations. Oil production of 525,000 barrels per day was in line with forecasts.

Stock Movement

During Monday trading, Diamondback shares fell by 2%.