Conflict in the Middle East has disrupted the stay-the-course narrative embraced by most Permian producers at the start of 2026. With sustained $100/bbl WTI prices growing more probable, East Daley Analytics sees the potential for production gains that could quickly fill crude oil pipelines exiting the basin.
Just one month ago, Permian operators guided to low-to-moderate growth at a WTI forward curve near $65/bbl, declining to ~$61 by 2027. That outlook implied roughly 2% production growth from 2025 to 2026, reinforcing expectations of continued capital discipline.
In early March, Operation Epic Fury disrupted that narrative. Prompt WTI prices surged above $90/bbl, though the forward curve remained steeply backwardated, reflecting market expectations that the conflict would be short-lived. As of March 6, the 2027 average WTI price was only modestly higher than pre-conflict levels, indicating limited reassessment of long-term supply risk. As we noted at the time, “a sustained price increase on the back end of the curve is necessary to bring more operators off the sidelines.”
That shift in the curve is now becoming a reality.
Escalating strikes and counterstrikes – most notably Iran’s targeting of critical oil and gas infrastructure, including Qatar’s Ras Laffan industrial complex – have materially altered the global supply outlook. Disruptions to LNG and liquids infrastructure increase the likelihood of sustained tightness in global energy markets, supporting a higher-for-longer price environment.
As of March 27, WTI Cushing contracts averaged ~$73/bbl in 2027. East Daley believes a sustained prompt price near $100, supported by a forward curve above $70, would meaningfully change producer behavior while also reinforcing global demand for US crude exports.
Permian Supply Response Under $100 Oil
In a prolonged $100/bbl oil scenario, we expect Permian producers to increase rig activity from ~241 rigs today to ~300 rigs by YE27.
While this response would be more muted than in prior $100 price environments – reflecting continued emphasis on capital discipline, free cash flow generation and inventory management – it still represents a meaningful acceleration in activity.
As a result, Permian crude production reaches ~7.3 MMb/d by 2027 in East Daley’s Crude Hub Model, compared to our base case of ~6.8 MMb/d. This implies an incremental ~500 Mb/d of supply on average in 2027.
At the same time, global pricing dynamics are increasing the pull on US crude. A widening Brent–WTI spread strengthens export incentives by improving the competitiveness of US barrels in international markets. As Brent trades at a premium, Gulf Coast exports become more attractive, supporting higher outbound volumes.
This premium is likely to remain elevated as geopolitical tensions persist, reinforcing export demand for Permian crude. In this environment, incremental supply is not only driven by higher flat prices but also by stronger global demand signals.
Egress Constraints Limit the Pace of Growth
The combination of rising supply and stronger export demand is converging on a network already operating near capacity, as shown in the Crude Hub Model. Permian takeaway capacity to the Gulf Coast is highly utilized across both major corridors:
- Corpus Christi, the primary export outlet, remains the most efficient pathway for waterborne crude flows. Key pipelines such as Cactus II are already operating above nameplate capacity, while Gray Oak and Cactus III are approaching full utilization.
- Houston-bound pipelines also face tight system constraints. Systems including Longhorn, West Texas Gulf, Permian Express, and Midland-to-ECHO are at or near operational limits.
- Cushing provides a secondary outlet, but is less directly tied to export flows and would likely fill only after Gulf Coast pathways are maximized.
The tightening in pipeline egress capacity has two key implications for crude markets:
1) Wider Midland-to-MEH Spreads
Higher production volumes combined with stronger export demand will increase pipeline utilization from the Permian to the Gulf Coast, driving wider differential from the Midland to Magellan East Houston (MEH) than currently implied by the market. This creates incremental marketing and transportation upside for key operators, including Plains All American (PAA), Enterprise Products (EPD) and Enbridge (ENB).
2) Increased Likelihood of Pipeline Expansions
New oil pipeline expansions are more likely with sustained higher oil prices. Several projects have started in the last year, including a Gray Oak expansion (+120 Mb/d) and a Midland-to-ECHO project (+200–210 Mb/d). A potential expansion of Cactus III (+300 Mb/d) has been discussed and becomes more probable if oil prices stay near $100.
Bottom Line: The market initially treated geopolitical disruption as a short-term price shock. However, recent escalation points to a more durable shift in global supply-demand dynamics. In a sustained $100/bbl oil environment, higher Permian production and stronger export demand act in tandem, pushing additional volumes onto an already constrained takeaway system. This convergence tightens crude egress, widens basin differentials, and increases the likelihood of new midstream investments. – Julian Renton, Keland Rumsey and Rob Wilson, CFA Tickers: ENB, EPD, PAA.
Download Part II of East Daley’s Permian Basin White Paper Series
The Permian Basin’s next big buildout is already taking shape, but this time the driver isn’t crude oil. In The Permian Basin at a Crossroads: Why This Pipeline Boom is Different, East Daley Analytics’ latest white paper reveals how gas demand from AI data centers, utilities and LNG exports is rewriting the midstream playbook in the leading US basin. Over 10 Bcf/d of new capacity and $12 billion in investments are reshaping flows, turning the Permian into a gas powerhouse even as rigs decline. Read Part II: Why This Pipeline Boom is Different
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