Key Takeaways
- The U.S. tight oil production is expected to shrink in 2026 for the first time without a crash event, according to Wood Mackenzie analysts.
- The analysts predict that the output will fall by 200,000 barrels per day in 2026, with WTI prices 20% lower than in 2025.
- The U.S. Energy Information Administration (EIA) forecasts a drop in Lower 48 States crude oil production from 11.29 million barrels per day in 2025 to 11.11 million barrels per day in 2026.
- Wood Mackenzie analysts also predict a shale gas "renaissance" in the U.S. in 2026, with gas overtaking tight oil deal spend.
- The analysts expect exploration to gain momentum, particularly in the Rockies, and renewed interest in deep gas in various basins.
Introduction to the Wood Mackenzie Report
In a recent insight report, analysts at Wood Mackenzie outlined that U.S. tight oil production will shrink without a crash event for the first time in 2026. The analysts stated that holding oil production flat in the U.S. today requires over two million barrels per day of new supply. They expect output to fall by 200,000 barrels per day in 2026, with WTI prices 20% lower than in 2025. This forecast could change market mentality and bolster international conventional investment plans. However, caution is still needed, as the 2026 tight oil deficit is filled by Guyana alone, and U.S. liquids will return to growth in 2028.
U.S. Energy Information Administration (EIA) Forecast
The U.S. Energy Information Administration (EIA) released its latest short-term energy outlook (STEO) in December 2025, which showed that Lower 48 States crude oil production, including lease condensate and excluding the Gulf of America, would drop from an average of 11.29 million barrels per day in 2025 to an average of 11.11 million barrels per day in 2026. Total U.S. crude oil production, including lease condensate, was projected to drop from an average of 13.61 million barrels per day in 2025 to an average of 13.53 million barrels per day in 2026. The EIA’s next STEO is scheduled to be released on January 13, 2026.
Shale Gas Renaissance
The Wood Mackenzie analysts also predicted a shale gas "renaissance" in the U.S. in 2026. They stated that as LNG FIDs have come thick and fast, there are concerns that the Haynesville and Permian aren’t big enough to meet next decade demand. Rising data center power demand adds weight to the argument. Nimble E&Ps will therefore revisit the gas basins of yesteryear, particularly in the Rockies, to unlock resource with low entry costs. Exploration will gain momentum, boosted by results in the Western Haynesville, and renewed interest in deep gas in various basins is also possible.
Gas Overtaking Tight Oil Deal Spend
The Wood Mackenzie analysts also predicted that gas will overtake tight oil deal spend in the U.S. in 2026. Many of the biggest oil deals have already happened, and focus will shift to consolidation in fragmented basins, with gas being top of the list. There are three main drivers for this shift: firstly, LNG equity holders and those with large offtake deals will add upstream gas as a Henry Hub price hedge; secondly, participants across the value chain will see arbitrage between current and future Henry Hub prices and discern a value play; thirdly, some governments seeking to rebalance cross-border trade to mitigate tariffs may see the gas value chain as a good way to deploy capital in the United States.
Conclusion and Future Outlook
In conclusion, the Wood Mackenzie report predicts a significant shift in the U.S. oil and gas industry in 2026. The expected shrinkage in tight oil production and the shale gas "renaissance" will likely have far-reaching implications for the industry. The EIA’s forecast also suggests a drop in crude oil production, which will need to be filled by other sources. As the industry continues to evolve, it will be essential to monitor these trends and developments closely. The analysts’ predictions and the EIA’s forecast provide valuable insights into the future of the U.S. oil and gas industry, and it will be interesting to see how these predictions play out in the coming year.