The Iran conflict has injected a sustained risk premium into global crude markets, pushing up not only near-term prices but also contracts on the back end of the futures curve. While East Daley Analytics has long been bullish on natural gas, the dramatic reversal in crude oil is likely to bring more associated supply to market and temper our outlook through 2030.
The figure above shows changes to WTI oil prices since the US and Israel launched joint strikes on Iran at the end of February. WTI is now expected to average ~$84/bbl in 2026 before gradually normalizing toward $67 by 2030. Even on this declining curve, prices are well above breakevens in the Permian and Eagle Ford, sustaining an incentive for oil-directed drilling.
In this new $70/bbl world, East Daley expects significant associated gas growth out of crude-weighted basins. Using our “Production Scenario Tools” in Energy Data Studio, we have updated our supply outlook to consider the impacts of higher crude oil prices.
The Permian is the most challenging basin to forecast. While oil drilling is most profitable in the Permian, gas pipeline takeaway is effectively filled through 4Q26 and poses a significant near-term challenge to ramping rigs. Nevertheless, some operators, particularly privates, may opt to drill through this constraint, either by increasing flaring or banking uncompleted wells until more gas egress is available.
We forecast that Permian rig additions peak in 2027 with an average of 29 incremental rigs (see figure). Gas production grows sharply starting in 2027 when new pipelines like Blackcomb and Hugh Brinson open takeaway, adding 1.5 Bcf/d more production by 2030 vs our current outlook.
Other basins contribute as well. The Eagle Ford adds 7 more rigs in 2026 and 2027 in our updated scenario. Rig additions in the Bakken and Powder River are more modest but still grow volumes by 165 and 72 MMcf/d, respectively, by 2029. Across all four basins, rig additions taper from 2028 onward as WTI prices moderate, but the production base established during the drilling surge sustains elevated output through 2030.
Combined, the Permian and Eagle Ford deliver nearly 2 Bcf/d more supply, flowing primarily to the Gulf Coast to satisfy growing LNG export demand. This displaces incremental production from the Haynesville, and may entirely remove the need for new supplies out of the Anadarko or Rockies. These Tier II basins will require gas prices upwards of $4.00/MMBtu to incentivize marginal drilling.
The implication for gas prices is bearish. Without the need for higher prices to pull supply from gas-weighted basins, we see Henry Hub hovering closer to $3.75/MMBtu in 2029 and beyond — roughly $0.75 below our current forecast of $4.50+ in the March Macro Supply & Demand report. The associated gas “subsidy” from crude economics could fundamentally reshape the supply cost curve, yielding a structurally softer gas price environment through the end of the decade. – Oren Pilant.
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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