* Q2 profit beats estimates on higher oil prices

* Raises 2026 production forecast to more than 1 million

boepd

* Diamondback doubles share buyback authorization to $16

billion

(Adds CEO quote in paragraph 8, analyst comment in paragraph 8,

details throughout, graphics)

By Katha Kalia

Aug 3 (Reuters) - Diamondback Energy ( FANG ) beat analysts'

expectations for second-quarter profit and raised its annual

production forecast on Monday, as supply disruptions due to the

prolonged conflict in the Middle East keep global oil prices

elevated.

The war in Iran, which started in late February, nearly shut

the flow of Middle East cargoes through the crucial Strait of

Hormuz, sending Brent crude from an average of $69.82 a barrel

in January to $126.41 in April and WTI from $65.17 to $109.64.

"The timing of the eventual supply normalization is

impossible to predict and we therefore expect this volatility to

continue," CEO Kaes Van't Hof said in a letter to shareholders.

The company's realized price for each barrel of oil produced

came in at $94.33 in the second quarter, compared with $62.34 a

year earlier.

Diamondback said service-cost inflation has so far been

largely limited to fuel-related expenses, but warned that costs

for fixed items such as casing would rise through the rest of

2026 and into 2027 as activity levels and rig counts increase in

the Permian Basin.

The company also doubled its share repurchase authorization

to $16 billion, excluding tax, with about $9.9 billion remaining

under the program as of July 31.

RBC Capital Markets analyst Scott Hanold said share buybacks

exceeded expectations.

Oil producers are widely expected to prioritize dividends,

share buybacks and balance-sheet strength as profits soar from

higher prices of the commodity.

Diamondback now expects to produce over 1 million barrels of

oil equivalent per day in 2026, compared with its prior

projection of 972,000 boepd.

The company produced 1,018 Mboepd in the second quarter, up

from 919,879 boepd a year earlier.

The Midland, Texas-based company Diamondback reported an

adjusted profit of $6.48 per share for the three months ended

June 30, compared with analysts' estimates of $6.01, according

to data compiled by LSEG.