Key facts
- US oil and gas drilling and OCTG producers expect higher demand due to the US-Iran war.
- West Texas Intermediate (WTI) crude oil prices rose from $68.19/bl in February to $84.82/bl in August.
- The US weekly active drilling rig count is at its highest level since April 2025.
- OCTG prices have increased, and domestic mills are struggling to meet demand due to import issues.
- US OCTG inventory levels are below five-year averages.
US oil and gas drilling and oil country tubular goods (OCTG) producers have significantly improved their demand outlooks, driven by the supply shock from the US-Iran war. This shift contrasts sharply with the declining rig counts and lower oil prices seen at the start of 2026. Crude oil prices, bolstered by the conflict in the Middle East, have risen substantially, leading to increased US drilling activity. The Argus West Texas Intermediate (WTI) fob Houston assessment reached $84.82/bl on August 11, up from $68.19/bl in late February. Publicly traded drilling rig contractors, such as Helmerich & Payne (H&P), Nabors, and Patterson-UTI, have revised their estimates upwards, anticipating a continued increase in active US drilling rigs. H&P's chief financial officer, Todd Scruggs, noted the significant reversal from a bearish sentiment at the beginning of the year to a more optimistic outlook for the coming quarters. US private and independent exploration and production companies have been the primary drivers of this increased demand, capitalizing on higher crude oil prices. The US weekly active drilling rig count has stabilized at 588 since mid-July, the highest level since April 2025. OCTG producers are responding to this heightened demand, coupled with import constraints and tight inventories. Companies like Vallourec and Tenaris are experiencing increased production and prices. Vallourec's CEO, Philippe Guillemot, stated that US tubular mill production and OCTG prices rose in the second quarter due to higher drilling activity and lower imports, with US OCTG inventory levels below five-year averages. Tenaris's Bay City, Texas, mill is operating at record production levels. The Argus Pipe Logix OCTG all items index has climbed, reflecting higher distributor selling prices. Domestic OCTG mills are pushing price increases and struggling to fill the gap left by reduced import volumes, which are affected by US anti-dumping investigations on major foreign suppliers like Austria and Taiwan. Despite these challenges, OCTG distributors remain optimistic about continued price increases.