U.S. Oil & Gas Drilling in 2026: How Record Production Is Affecting Oil Prices
The United States is producing more oil than at virtually any point in its history.
That might sound like a recipe for cheap oil. But in 2026, the relationship between American drilling and the price consumers pay for energy has become much more complicated.
U.S. crude oil production is on track to average approximately 13.8 million barrels per day in 2026, according to the U.S. Energy Information Administration (EIA), surpassing the previous record set in 2025. Much of that production is coming from the Permian Basin of Texas and New Mexico, where improvements in horizontal drilling, longer laterals and hydraulic fracturing have allowed producers to extract more oil from fewer drilling locations.
Yet oil prices have risen sharply at points during 2026 because the United States is only one part of a much larger global oil market.
Understanding where oil prices go next therefore requires looking at three things together: U.S. drilling, worldwide oil supply and global petroleum demand.
The State of U.S. Oil Drilling in 2026
America's oil industry remains remarkably active.
Baker Hughes reported 595 active U.S. oil and gas rigs as of September 18, 2026, up 53 rigs from the comparable week in 2025. Rig counts remain one of the industry's most closely watched measures because they provide an indication of how aggressively producers are developing future supplies.
But rig count alone no longer tells the entire story.
Oil companies have become significantly more productive with each rig.
The biggest example is the Permian Basin, stretching across western Texas and southeastern New Mexico. The EIA expects Permian crude production to average approximately 6.8 million barrels per day in 2026, about 3% higher than in 2025. That means the Permian alone is producing roughly half of America's crude oil.
Technology is a major reason.
The average horizontal lateral drilled in the Permian increased from approximately 6,149 feet in 2015 to 10,867 feet in 2025. Even more striking, wells with laterals longer than 15,000 feet—sometimes called "super-laterals"—accounted for about 15% of new Permian horizontal wells completed in 2025.
Operators can therefore reach considerably more oil-bearing rock from a single drilling location.
This helps explain why U.S. production can rise without returning to the enormous rig counts seen during previous drilling booms.
U.S. Oil Production Is Setting Records
The United States has been the world's largest crude oil producer since 2018.
In 2025, American crude oil production averaged a record level of roughly 13.6–13.7 million barrels per day, depending on the EIA series and rounding methodology being used. The EIA now forecasts another record of approximately 13.8 million barrels per day for 2026.
Production is also becoming geographically concentrated.
The largest increases are coming from:
Permian Basin — Texas and New Mexico: The country's dominant shale oil region and its most important source of incremental production.
Federal offshore Gulf: Several major offshore projects that began production in 2025 and 2026 have added significant new supplies.
Other shale regions: Areas including the Bakken and Eagle Ford remain important contributors, although growth has increasingly centered on the Permian.
Four large offshore developments—Shenandoah, Ballymore, Whale and Salamanca—have recently added production in the Gulf, while additional projects are expected to contribute to supply.
The result is an American oil industry capable of producing quantities that would have seemed extraordinary two decades ago.
Oil Prices Over the Last 10 Years
WTI crude oil prices demonstrate just how dramatically the energy market has changed.
Approximate annual average WTI prices show the boom, pandemic collapse, post-pandemic surge and subsequent normalization:
| Year | Approx. Average WTI Price |
|---|---|
| 2016 | $43/barrel |
| 2017 | $51/barrel |
| 2018 | $65/barrel |
| 2019 | $57/barrel |
| 2020 | $39/barrel |
| 2021 | $68/barrel |
| 2022 | $95/barrel |
| 2023 | $78/barrel |
| 2024 | $77/barrel |
| 2025 | $65/barrel |
| 2026 | About $84 through August* |
*2026 is not a completed calendar year. The EIA reported WTI averaging approximately $84 per barrel through August, so it should not be directly interpreted as a final annual average. Historical WTI figures are based on EIA price data.
The trend tells an important story.
Oil prices aren't determined simply by how many wells American companies drill.
They reflect the balance between worldwide supply and worldwide demand.
Why More U.S. Drilling Doesn't Automatically Mean Cheap Oil
Imagine the global petroleum market as a giant reservoir.
Every producing country adds oil to it, while refineries, automobiles, airplanes, factories, ships and petrochemical facilities continuously remove oil.
Prices are heavily influenced by whether that reservoir is filling or draining.
When global production exceeds consumption, inventories generally increase and oil prices face downward pressure.
When consumption exceeds available production, inventories decline and prices generally face upward pressure.
This relationship was visible earlier in 2026.
In February, the EIA was forecasting significant global inventory builds and consequently expected weaker oil prices. But the market changed substantially as geopolitical disruptions constrained Middle Eastern production and exports. By September, EIA estimated that global inventories had fallen by approximately 400 million barrels during 2026.
That change illustrates why oil forecasts can move dramatically.
Supply and demand expectations can change in a matter of months.
The Middle East Still Matters Enormously
Even though the United States is now the world's largest oil producer, events thousands of miles away can quickly affect American oil prices.
Oil is globally traded.
A disruption involving major Middle Eastern producers can reduce the number of barrels available to buyers around the world. Those buyers then compete for barrels produced elsewhere—including American crude.
That pushes international prices higher.
The EIA reported that Brent crude averaged approximately $91 per barrel in August 2026, $7 higher than July. Its September outlook projected Brent averaging roughly $90 during the second half of 2026 as global inventories remained tight.
This explains one of the biggest misconceptions about American energy.
The United States can produce record amounts of oil and still experience high oil prices.
Domestic production increases supply, but it does not isolate America from the world oil market.
Oil Prices Also Determine How Much America Drills
The relationship works in both directions.
Drilling influences oil supply.
But oil prices also influence drilling.
When WTI rises, more potential drilling locations become economically attractive. When prices decline, producers may postpone drilling projects that would generate inadequate returns.
In 2026, industry executives surveyed by the Dallas Federal Reserve reported average breakeven prices of approximately $69 per barrel in the Permian Midland Basin and $63 in the Delaware Basin, according to the EIA.
With WTI averaging about $84 through August 2026, many Permian drilling opportunities remained economically attractive.
This creates an important feedback loop:
Oil prices rise → drilling becomes more profitable → companies drill and complete more wells → production increases → additional supply eventually puts downward pressure on prices.
The opposite can happen when prices fall.
Oil prices fall → drilling economics deteriorate → companies reduce activity → production growth slows → supply tightens → prices may eventually recover.
The process is not instantaneous. It can take months or years for changes in investment decisions to translate into meaningful production changes.
The Permian Has Changed the Supply Equation
Perhaps the biggest structural change in the American oil market is productivity.
Permian hydrocarbon production increased from approximately 2.9 million barrels of oil equivalent per day in 2015 to 11.2 million BOE per day in 2025, an increase of about 284%.
Yet the number of wells drilled has not increased anywhere close to that rate.
Since 2022, new horizontal well completions in the Permian have remained around 6,000 annually. Producers are instead getting substantially more hydrocarbons from the wells they drill.
This means analysts can no longer look at rig counts alone and conclude whether American production is increasing or decreasing.
Well length, geology, completion techniques, drilling speed, pad development and productivity per well are increasingly important.
Natural Gas Is Part of the Story Too
Oil drilling also affects America's natural gas market.
Many Permian wells primarily target oil but produce large quantities of natural gas as a byproduct, known as associated gas.
Permian marketed natural gas production increased from approximately 17.2 billion cubic feet per day in 2021 to 27.6 Bcf/d in 2025—a roughly 60% increase. Over the same period, crude oil production increased approximately 39%.
The EIA expects Permian gas production to average approximately 29.2 Bcf/d in 2026.
This means oil drilling decisions can affect natural gas supply even when natural gas prices themselves aren't particularly strong.
What Could Push Oil Prices Lower?
Several developments could create downward pressure on crude oil prices.
The most important would be rising global production combined with slower demand growth.
Additional U.S. shale production, recovering Middle Eastern exports, increasing production elsewhere and rising inventories could collectively create a global surplus.
That is why inventories are so important.
Earlier in 2026, expectations of large inventory builds resulted in much lower oil-price forecasts. Later disruptions reversed that outlook.
If global inventories begin rebuilding in 2027, EIA currently expects Brent prices to decline from roughly $90 during the second half of 2026 toward an annual average around $74 per barrel in 2027.
What Could Push Oil Prices Higher?
The opposite scenario is also possible.
Oil prices could remain elevated—or rise further—if global demand grows faster than production.
Potential upward pressures include geopolitical disruptions, production outages, reduced OPEC+ output, stronger economic growth, insufficient investment in new production and unexpectedly strong transportation or industrial fuel demand.
Oil markets often react particularly strongly when inventories are already low.
When there is little spare supply available, losing even a relatively small percentage of global production can produce a disproportionately large price reaction.
America's New Role in the Global Oil Market
The biggest change of the past decade may be America's transformation from a country worried about declining domestic production into the world's largest crude producer.
Horizontal drilling and hydraulic fracturing unlocked enormous quantities of oil from formations once considered uneconomic.
Now the question isn't simply, "How many rigs are drilling?"
The more important questions are:
How productive are those rigs?
Where are the new wells located?
How long are the laterals?
How quickly are wells being completed?
How much oil is each new well producing?
And how does that additional American production compare with changes in global demand and production elsewhere?
Those are increasingly the variables determining the next move in oil prices.
Follow U.S. Drilling Activity on DrillingMaps.com
Oil prices can change quickly, but understanding where drilling is occurring provides valuable insight into where future American energy supplies may come from.
DrillingMaps.com tracks oil and gas wells and drilling activity across the United States, helping users visualize the enormous network of energy development behind America's oil and natural gas production.
As the Permian Basin continues expanding, offshore projects come online and drilling technology improves, the geography of America's energy industry continues to change.
The United States may be producing more oil than ever, but that doesn't mean oil prices will always fall.
Ultimately, crude prices remain a worldwide equation:
U.S. drilling + global production + global demand + inventories + geopolitics = oil prices.
And in 2026, that equation is demonstrating once again that record American production can coexist with a tight global oil market and relatively high oil prices.
For anyone trying to understand where the oil market goes next, watching both oil prices and the drilling map may provide a much clearer picture than watching either one alone.