Crude Oil Production Hit Record 13.6M b/d Before 2026 Price Shock

A record set in a cheap-oil year

In 2025, U.S. oilfields produced more crude than in any previous year, even though oil prices were low enough to cut drilling. The U.S. Energy Information Administration (EIA) reported that crude production rose 3%, or 350,000 barrels per day (b/d), to an annual average of 13.6 million b/d.22 The Lower 48 states, excluding the federal Gulf of America, supplied 11.3 million b/d, or 83% of the total. Alaska and the offshore Gulf produced the rest.22

The higher output did not come from more drilling. The number of active rigs in the Lower 48 fell 5% from 2024, and operators drilled 1% fewer wells. Efficiency gains still pushed production slightly higher.22 Wells completed in 2025 contributed 2.9 million b/d, and older wells supplied 8.3 million b/d.22 West Texas Intermediate (WTI) crude averaged $65 per barrel in 2025, down from $77 in 2024, and the EIA tied the drop in rig and well activity to that decline.22 Regional coverage told the same story: production set a record despite weak prices, a smaller rig count and fewer new wells.26

The U.S. also extended its lead over other countries. The EIA's international data show U.S. production was about 40% higher than that of Russia or Saudi Arabia, the next two largest producers. Russia's output was roughly flat, and Saudi Arabia grew modestly as OPEC+ eased voluntary cuts.21 Total U.S. energy production reached a fourth straight record of 107 quadrillion Btu in 2025, with record output from natural gas, crude oil, natural gas plant liquids and renewables.23

The Permian did most of the work

The Permian Basin in West Texas and southeastern New Mexico accounted for nearly all of the growth. Its output rose by 280,000 b/d to 6.6 million b/d, about 48% of national production.22 Other shale regions were flat or shrinking. Eagle Ford output rose 1.6% to 1.2 million b/d, while the Bakken lost 30,000 b/d and also ended near 1.2 million b/d.22 Offshore production added 111,000 b/d to reach 1.9 million b/d, helped by five new Gulf projects: Whale, Ballymore, Dover, Shenandoah and Leon-Castile.22

Permian costs explain why drilling there held up. Executives in the Dallas Fed Energy Survey put 2025 breakeven prices at $61 per barrel in the Midland Basin and $62 in the Delaware Basin, below 2025's $65 WTI average.22 The EIA also said executives had more recently reported slightly higher breakevens.22 Production is concentrating in one basin, and margins there are thin. That makes U.S. supply more sensitive to price than the headline record suggests.

The official figures also changed slightly between reports. The EIA's narrative releases use 13.6 million b/d for 2025 and 13.2 million for 2024.2221 The October 2026 Short-Term Energy Outlook (STEO) table now shows 13.7 million and 13.3 million.11 The difference comes from rounding and data revisions and doesn't change the story: both versions show another record year.

A forecast reversed by war

The EIA's outlook for 2026 has changed sharply since January. That month, it projected that WTI would fall to $52 per barrel in 2026 and $50 in 2027, below Permian breakevens. On that basis, it expected production to hold near 13.6 million b/d before dropping 2% to 13.3 million b/d in 2027, which would have been the first annual decline since 2021.24 Much of the industry expected low prices and a slowdown in the shale patch. Earlier forecasts had pointed the same way: in August 2025, Reuters reported that the EIA expected output to fall in 2026 as prices weakened.27

The Middle East conflict changed those assumptions. In its October 2026 outlook, the EIA projects U.S. crude output of 13.9 million b/d in 2026 and 14.3 million in 2027.11 It now expects Brent to average $96 per barrel in 2026 and $84 in 2027, compared with $91 and $74 a month earlier.11 Brent averaged $114 in September, $23 above August, after attacks on Middle East oil infrastructure and tankers. Attacks on Saudi Arabia's East-West pipeline, which bypasses the Strait of Hormuz, briefly halted flows on that route and helped push the daily Brent price to $131 on September 15.12 Rigzone reported that the October outlook was the EIA's third consecutive increase to both its 2026 and 2027 Brent forecasts.18 The EIA's July outlook had put 2026 Brent at $81.91.18

The EIA expects Brent to average $105 in the fourth quarter before falling as Middle East flows recover and inventories rebuild. It projects about $74 by late 2027, while warning that actual prices will probably be more volatile than its forecast.12 For U.S. producers, the main point is that WTI is projected to average about $88 in 2026, which the EIA says will support renewed production growth along with continued gains in well productivity.21

The shale industry did not set out to grow into a supply shock. It became more efficient during a period of low prices, then gained revenue and output when the Middle East disruption drove prices up. The record set in 2025 is likely to be broken again within two years, and the reason is high prices rather than a planned expansion.

Drivers pay the price

Consumers are seeing the impact at the pump. AAA reported a national average of about $4.31 for a gallon of regular on October 17, down about six cents from a week earlier and well above roughly $3.05 a year ago.5 AAA said this is the first October on record with the national average above $4 a gallon. September also set a monthly record at $4.33, 50 cents higher than the previous September high.47 Prices have stayed above $4 for 158 days this year, which breaks the 2022 record.9

Diesel prices are under even more pressure. Diesel averaged about $6.33 on October 17.5 One tracker recorded an all-time high of $6.53 on September 22 and noted that distillate stocks are about 12% below their five-year average.8 The EIA expects gasoline to average $3.91 in 2026, up from $3.10 in 2025, and $3.56 in 2027. It says diesel shortages are pushing up crude demand from refiners trying to meet diesel needs.12 Reports on prices at the pump agree on the size of the increase. They differ on how long it will last: the EIA's base case shows a gradual decline, while one independent scenario model gives roughly even odds to a sustained standoff or a further escalation.8

The Strategic Petroleum Reserve has less capacity to absorb another shock. It held 283 million barrels in the week ending October 9, the lowest level since 1982.8

Natural gas stays cheap for now

Natural gas has moved in the opposite direction from oil, partly because of record oil production. Oil wells in plays like the Permian also produce gas, and the EIA says that associated gas has supported both gas-fired power generation and exports.21 Dry gas production reached a record 39 trillion cubic feet in 2025.23 The October outlook expects Henry Hub prices to average $3.48 per million Btu in 2026 and $3.16 in 2027, as inventories stay above average even with rising LNG exports.11 That is a major change from January, when the EIA projected $4.51 for 2027 because it expected LNG and power demand to grow faster than supply.33

Data centers and the long-run gas question

Data centers are expected to drive much of the long-term growth in power demand. In January, the EIA forecast the strongest four-year rise in U.S. electricity demand since 2000 and attributed it mostly to large computing facilities.33 BloombergNEF projects that gas burned to power U.S. data centers could increase by 15 billion cubic feet per day through 2035, more than double its December estimate.35 It says LNG exports and power generation together could leave producers about 11 billion cubic feet per day short of projected demand.39 Wood Mackenzie has said the era of cheap Henry Hub gas is ending, while Kimmeridge's Ben Dell has argued that undeveloped U.S. acreage can keep supply up.39 The cost of building gas-fired plants has also risen sharply: BloombergNEF estimates it is up 66% in two years.31

Associated gas is the main link between these trends. High oil prices encourage drilling in oil-heavy basins, and that drilling adds gas supply that data centers and LNG terminals can use. If oil prices fall back toward breakeven, producers would have to rely more on dry-gas drilling, which costs more. One industry executive said that shift could push gas and electricity prices moderately higher.35 Current gas prices therefore depend on oil prices staying high. AI developers counting on cheap gas would be wise to plan for the risk that oil prices fall.

The bottom line

The 2025 record mainly reflected efficiency gains in the Permian during a year of low prices. In 2026, the same industry is meeting a price shock it did not cause. Producers stand to gain, drivers are paying record autumn prices, and consumers of cheap natural gas, including data centers, depend on an oil price that could still turn sharply in either direction.