Midland, Texas-based Diamondback Energy, the third-largest oil producer in the Permian Basin, has announced plans to ramp up drilling and fracking operations in response to the prolonged Iran conflict and surging crude prices. The company, a bellwether for the U.S. energy sector, is increasing its rig count and adding fracking crews to boost production, signaling a shift in strategy amid global supply-demand imbalances.
Production Expansion Underway
Diamondback CEO Kaes Van't Hof stated in a shareholder letter that the company is 'well-positioned to respond to the current macro environment,' with oil prices reaching $105 per barrel—an 85% increase since the start of the year. The company averaged 521,000 barrels of oil per day in the first quarter, exceeding its guidance, and plans to maintain or exceed this output through the remainder of 2024.
'We believe there is a legitimate supply-demand imbalance and that the associated price signal is the catalyst to begin to grow production,' Van't Hof wrote.
Strategic Shifts and Market Impacts
Diamondback's decision marks a reversal from its 'stoplight' system, introduced a year ago, which warned of a 'red light' amid President Trump's tariff wars and increased OPEC production. With the Strait of Hormuz effectively closed due to the Iran conflict, global oil flows have bottlenecked, driving prices higher. The company is now increasing its rig count from 15 to 17 or 18 and adding a fifth fracking crew to focus on previously drilled but uncompleted wells (DUCs) to expedite output.
While larger publicly traded oil producers have hesitated to alter their capital spending plans, Diamondback has raised its 2026 capex from $3.75 billion to $3.9 billion. The company's total oil and natural gas production is projected to reach at least 972,000 barrels of oil equivalent per day in 2024, up from its previous midpoint guidance of 944,000 barrels.
This expansion positions Diamondback as a key player in addressing global oil shortages, though its output still trails industry leaders Chevron and Exxon Mobil, which are also scaling production in the Permian Basin.