US Oil Output to Slip in 2026 as Price Decline Slows Drilling
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U.S. oil production is now expected to fall in 2026 as prices slide, according to a government forecast, reversing years of growth that propelled the country to being the world’s top producer.
U.S. crude output is now expected to shrink to 13.28 million barrels a day in 2026, according to the Energy Information Administration’s Short-Term Energy Outlook released Aug. 12. The agency’s previous projection in July was for 13.37 million barrels a day, and the country is on track for the first annual drop in production since 2021.
The decreased output deals a fresh blow to President Donald Trump’s push for American energy dominance. Trump declared an energy emergency early in his second term in a bid to boost production.
Yet shale companies and the U.S. agency have warned that falling oil prices heading into 2026 will decrease the appetite for drilling, with current drilling rigs in the U.S. hovering around four-year lows.
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Still, increased efficiency from existing wells is expected to boost production by 1.5% to an all-time high of about 13.41 million barrels a day this year.
The increased U.S. output, alongside increases from Saudi Arabia and its allies, is set to contribute to global inventory builds of more than 2 million barrels a day in the fourth quarter of 2025 and the first quarter of next year, according to the EIA. That’s about 800,000 barrels a day higher than the agency’s estimate last month.
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The EIA also increased its forecasts for a global supply surplus in 2025 to about 1.7 million barrels a day, up from a previously estimated 1.1 million barrels. For next year, the agency expects a surplus of around 1.5 million barrels a day, compared to its previous estimate of 1.1 million barrels a day.
That brings the U.S. estimates more in line with the International Energy Agency, which projects a supply glut of 2 million barrels a day in 2026. The IEA will release its latest report Aug. 13.
While lower oil prices present a challenge for shale companies, it could help bring relief for consumers. The U.S. is now predicting that Brent crude prices will drop to $50 a barrel in early 2026, which is down about $15 a barrel from where crude futures are currently trading.
The average national retail gasoline price is now estimated to be $2.90 a gallon next year, according to the EIA’s report. That would be lowest cost since the spring of 2021, according to AAA data.
