Key Points
- The U.S. has revised its 2025 crude oil output growth forecast downward to 160,000 barrels per day, down from 210,000, due to slower drilling activity.
- Research suggests that major basins like Permian, Bakken, and Eagle Ford will see varied impacts, with Permian leading at 6.53 million barrels per day in 2025, while others may stagnate.
- It seems likely that economic factors, including volatile oil prices and policy uncertainties, are contributing to the slowdown, with some industry experts predicting even lower outputs.
Background
The U.S. Energy Information Administration (EIA) recently updated its outlook, reflecting a cautious approach to domestic crude oil production for 2025 and 2026. This revision comes amid challenges like fluctuating oil prices and reduced drilling, affecting key oil-producing regions.
Basin-Specific Output
The EIA data shows significant variation across basins. For instance, the Permian Basin is expected to produce 6.53 million barrels per day in 2025, while the Bakken and Eagle Ford are projected at 1.18 million and 1.15 million barrels per day, respectively. These figures highlight the Permian’s dominance but also the stagnation in other areas.
Market and Policy Influences
Economic pressures, including OPEC+ production increases and potential tariffs under President Trump, are likely influencing the slowdown. Industry discussions on platforms like X suggest even more conservative outlooks, with some predicting outputs below EIA estimates.
Detailed Analysis and Insights
The United States has recently adjusted its 2025 crude oil output growth forecast, signaling a notable slowdown in domestic production as drilling activity diminishes. This adjustment, detailed in the U.S. Energy Information Administration’s (EIA) Short-Term Energy Outlook (STEO) released on July 8, 2025, reflects a complex interplay of economic, market, and policy factors. Below, we explore the revised forecast, analyze output trends by major U.S. basins, and consider the broader implications, drawing on official data, industry insights, and expert opinions from social media discussions.
Revised Forecast and Economic Context
The EIA’s latest STEO, published on July 8, 2025, revised the 2025 U.S. crude oil production growth forecast to 160,000 barrels per day (b/d), a reduction from the previous estimate of 210,000 b/d in June. This adjustment brings the expected 2025 output to 13.37 million b/d, up slightly from 13.21 million b/d in 2024, but with growth significantly tempered. For 2026, the forecast suggests production will remain flat at 13.37 million b/d, indicating a potential plateau in output growth.
This slowdown is primarily driven by choppy oil prices, which have been hovering in the mid-$60s per barrel for Brent crude and around $63-$64 for WTI, below the $70-$80 range considered optimal by many analysts. Additional pressures include uncertainties surrounding President Donald Trump’s proposed tariffs, which could disrupt global trade and demand, and OPEC+’s decision to increase production by more than 411,000 b/d starting in August 2025, raising fears of a supply glut.
Industry experts on X, such as @COoilngas7 , have expressed skepticism about official figures, stating on July 5, 2025, that U.S. output is already below 13 million b/d and could exit 2025 close to 12.7 million b/d, labeling EIA numbers as “garbage.” Similarly, @ZmansEnrgyBrain noted on July 7, 2025, that the EIA STEO is expected to reflect further reductions, aligning with expectations of a bigger drop. These views are echoed in a Dallas Fed survey reported by @SPGCIOil on July 2, 2025, which found that Q2 production indexes turned negative as firms plan fewer wells, with producers expecting $68/b WTI by year-end and expressing concerns about Trump’s price targets and market volatility. JPMorgan’s analysis, also shared by @SPGCIOil , suggests global upstream oil spending could contract for the first time since 2020, with U.S. shale-sector spending expected to fall 1.9%, driven by policy concerns.
Basin-Specific Production Trends
To understand the regional impacts, we analyzed crude oil production forecasts for major U.S. basins, using data from the EIA’s STEO. The following table summarizes the annual average production for 2025 and 2026, based on quarterly data, for key regions, which align with major basins:
|
Region/Basin
|
2025 Production (million b/d)
|
2026 Production (million b/d)
|
|---|---|---|
|
Permian Basin
|
6.53
|
6.50
|
|
Bakken Formation
|
1.18
|
1.18
|
|
Eagle Ford Shale
|
1.15
|
1.16
|
|
Appalachia Region
|
0.18
|
0.16
|
|
Haynesville Region
|
0.03
|
0.03
|
|
Rest of Lower 48 States
|
2.07
|
2.06
|
Permian Basin (Texas and New Mexico)
The Permian Basin remains the dominant force, contributing over 48% of total U.S. crude output in 2025, with an annual average of 6.53 million b/d. Production is expected to increase from 6.41 million b/d in Q1 2025 to 6.59 million b/d in Q4 2025, but it is projected to plateau at around 6.50 million b/d in 2026. This slowdown is reflected in reduced rig counts, dropping to 305 in June 2025 from 340 a year earlier, as operators prioritize capital discipline over expansion, driven by lower oil prices and efficiency gains from longer laterals and improved completion techniques.
Bakken Formation (North Dakota and Montana)
The Bakken region is forecasted to produce 1.18 million b/d in 2025, with quarterly variations ranging from 1.15 million b/d in Q2 to 1.20 million b/d in Q1. For 2026, production is expected to remain stable at 1.18 million b/d. Drilling activity has declined, with rig counts at 35 in mid-2025, a five-year low, due to high breakeven costs ($60-$70 per barrel) that make it sensitive to current price levels, limiting new well completions.
Eagle Ford Shale (South Texas)
The Eagle Ford is projected to produce 1.15 million b/d in 2025, increasing from 1.11 million b/d in Q1 to 1.17 million b/d in Q3 and Q4. In 2026, production is expected to rise marginally to 1.16 million b/d. However, drilling activity has waned, with only 50 active rigs in June 2025, down from 65 a year ago, as smaller operators face financing challenges and larger firms redirect capital to the Permian, particularly given the basin’s exposure to natural gas liquids (NGLs) amid soft NGL prices.
Appalachia and Haynesville Regions
The Appalachian region, known for unconventional plays, is expected to produce 0.18 million barrels per day (b/d) in 2025, declining to 0.16 million b/d in 2026, reflecting minimal growth due to regulatory hurdles and a focus on natural gas. The Haynesville region, primarily focused on gas, maintains steady production at 0.03 million barrels per day (b/d) throughout both years, with little impact from the oil price environment.
Rest of Lower 48 States
This category, encompassing basins like Niobrara and Anadarko, is projected to produce 2.07 million b/d in 2025, slightly increasing to 2.06 million b/d in 2026. It shows stability but limited growth, with smaller operators dominating and facing financial constraints in a low-price environment.
Market Dynamics and Structural Challenges
The trimmed forecast reflects a confluence of market dynamics and structural challenges. Oil prices are under pressure from global oversupply, with OPEC+’s production hike and Saudi Arabia’s push for market share contributing to fears of inventory builds. Analysts project Brent at $66-$67/b and WTI at $63-$64/b in 2025, straining higher-cost basins like Bakken and Anadarko. The U.S. shale industry faces the longest streak of declining rig counts in five years, as reported in June 2025, signaling caution among producers. While technological advancements have improved well productivity, the depletion of prime drilling locations requires higher capital expenditures, and investor pressure for returns over growth limits reinvestment.
Policy uncertainties, particularly Trump’s tariff proposals, add further complexity. The Dallas Fed survey found that 42% of large exploration and production firms expect to drill significantly fewer wells in 2025, citing tariff-related profit concerns and lower prices, aligning with social media sentiments about policy impacts.
Implications for the Energy Sector
The revised forecast poses challenges for the U.S. energy sector, potentially reducing royalty revenues for oil-producing states like Texas and North Dakota, and impacting local budgets. It also complicates the administration’s energy dominance goals, especially with projected declines in 2026. However, lower oil prices could benefit consumers and energy-intensive industries, easing inflationary pressures. The diesel market, facing a supply crunch with stockpiles at their lowest since 1996, could see supported refining margins despite slower crude production.
Looking Ahead
The U.S. oil industry is at a crossroads in 2025, with the Permian Basin driving production, while others face stagnation or decline unless oil prices recover or policy uncertainties subside. Producers may rely on efficiency gains and cost-cutting measures, but OPEC+’s actions and global demand trends will be crucial. The trimmed forecast highlights the fragility of the shale boom, necessitating adaptation to constrained growth and intensified competition.
I have said this many times: if China’s slowdown in demand is less than India’s growth, we will see a steady global demand for the remainder of 2025 and into 2026. And secondly, that we are short trillions of dollars in investment to meet regular decline curves in capital expenditures. Therefore, an investment in U.S. oil and gas is a good idea, as the odds are in favor of oil prices increasing.
Sources:
- U.S. Energy Information Administration, Short-Term Energy Outlook, July 2025, https://www.eia.gov/outlooks/steo/
- Bloomberg, “US Trims 2025 Crude Output Growth Forecast as Drilling Stalls,” July 8, 2025, https://www.bloomberg.com/news/articles/2025-07-08/us-trims-2025-crude-output-growth-forecast-as-drilling-stalls?srnd=phx-industries
- Federal Reserve Bank of Dallas Survey, https://www.dallasfed.org/research/surveys/energy-survey.aspx
- X posts from @COoilngas7,@ZmansEnrgyBrain, and@SPGCIOil, retrieved from recent discussions on July 2-7, 2025.
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