US Oil Output Forecast for 2026 Cut as Prices Decline

Highlights:

• US crude output is now forecast to drop to 13.28 million barrels/day in 2026, marking the first annual decline since 2021.
• Lower oil prices and a four-year low in drilling rigs weigh on production growth, despite Trump’s push for energy dominance.
• EIA expects 2024 production to rise 1.5% to a record 13.41 million barrels/day at the time of writing, driven by improved efficiency from existing wells.

Production Decline Projected

US oil production is now expected to fall in 2026 as weakening prices reduce drilling activity, according to the latest government forecast. The US Energy Information Administration (EIA), in its updated Short-Term Energy Outlook, projects output to decline to 13.28 million barrels per day in 2026. This marks a downgrade from its July estimate of 13.37 million barrels per day and signals the first annual production drop since 2021.

Impact on Energy Policy

The revised forecast is a setback for President Donald Trump’s ongoing efforts to reinforce American energy dominance. Earlier in his second term, Trump declared an “energy emergency” aimed at boosting domestic oil output. However, lower crude prices have dampened investment enthusiasm, and the number of active drilling rigs in the US remains near a four-year low.

Shale Sector Challenges

Industry leaders in the shale sector, along with the EIA, have cautioned that sustained price weakness heading into 2026 will likely deter fresh drilling projects. As capital spending tightens, maintaining high production levels becomes increasingly challenging despite technological advancements and efficiency gains.

Short-Term Growth Still on Track

Despite the bearish 2026 outlook, US oil output is still expected to rise in the short term. At the time of writing, the EIA projects production will grow by 1.5% this year, reaching a record-high 13.41 million barrels per day. This increase is being driven largely by improved performance from existing wells rather than new drilling initiatives.

Outlook

While near-term production records remain within reach, the industry faces significant headwinds beyond 2025. The combination of falling prices, fewer rigs, and cautious capital allocation could reshape the US oil market’s growth trajectory in the coming years.

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