Key Takeaways:
- The U.S. Energy Information Administration (EIA) projects that total U.S. crude oil production will drop in 2026 and 2027.
- The EIA forecasts U.S. crude oil output to average 13.59 million barrels per day in 2026 and 13.25 million barrels per day in 2027.
- Lower 48 States production is expected to decline, while Alaska and Gulf of America production are expected to increase in 2026.
- The decline in production is attributed to sustained lower crude oil prices, which will result in a pullback in drilling and completion activity.
- The EIA expects U.S. crude oil production to remain close to the 2025 average on an annual basis in 2026 before falling by 340,000 barrels per day in 2027.
Introduction to the EIA’s Short-Term Energy Outlook
The U.S. Energy Information Administration (EIA) has released its latest Short-Term Energy Outlook (STEO), which projects that total U.S. crude oil production will drop in 2026 and 2027. According to the STEO, U.S. crude oil output, including lease condensate, is expected to average 13.59 million barrels per day in 2026 and 13.25 million barrels per day in 2027. This is a decline from the 2025 average of 13.61 million barrels per day.
Regional Production Breakdown
The STEO provides a regional breakdown of crude oil production, with the Lower 48 States expected to produce 11.11 million barrels per day in 2026 and 10.87 million barrels per day in 2027. Federal Gulf of America production is forecast to average 2.00 million barrels per day in 2026 and 1.89 million barrels per day in 2027, while Alaska output is projected to come in at 0.47 million barrels per day in 2026 and 0.50 million barrels per day in 2027. In 2025, Lower 48 States production averaged 11.28 million barrels per day, Federal Gulf of America production came in at 1.91 million barrels per day, and Alaska output averaged 0.42 million barrels per day.
Quarterly Production Projections
The EIA’s STEO also provides a quarterly breakdown of crude oil production, with U.S. crude oil production expected to come in at 13.73 million barrels per day in the first quarter of 2026, 13.65 million barrels per day in the second quarter, 13.47 million barrels per day in the third quarter, and 13.50 million barrels per day in the fourth quarter. In 2027, production is expected to decline to 13.43 million barrels per day in the first quarter, 13.31 million barrels per day in the second quarter, and 13.13 million barrels per day in the third and fourth quarters.
Factors Contributing to the Decline in Production
The EIA attributes the decline in production to sustained lower crude oil prices, which will result in a pullback in drilling and completion activity. Although there were 13 percent fewer rigs drilling for oil in the United States at the end of 2025 than there were at the beginning of the year, production reached a record high last year as rising well-level productivity outweighed this drop. However, the EIA expects that over the next two years, the decline in crude oil prices will outweigh ongoing increases in productivity, leading to a decline in production.
Improvements to Historical Estimates
The EIA has introduced improvements to its historical crude oil and natural gas estimates of regional production breakouts in the STEO. As a result, some historical estimates of crude oil production have been reallocated among the regions going back to the beginning of 2024. The most notable change is that about 30,000 barrels per day of crude oil have been allocated to the Permian region that was formerly part of the Rest of Lower 48 States region.
Permian Basin Production
The Permian basin was the largest contributor to overall U.S. crude oil production growth in previous years. However, in 2026, the EIA estimates that annual production growth for the Permian basin will remain largely unchanged. With fewer rigs drilling in the Permian, production growth has primarily come from increasing production efficiency out of maturing wells. This dynamic is even more pronounced in tight oil regions outside of the Permian, where the EIA expects productivity improvements will continue but be offset by declining rig activity, particularly later in the year as the impact of low crude oil prices on drilling activity becomes more apparent.
Onshore and Offshore Production
The EIA expects onshore production in the Lower 48 states to fall by 170,000 barrels per day in 2026, partly offset by production growth of 50,000 barrels per day in Alaska and 90,000 barrels per day in offshore Gulf of America. Production growth in Alaska and the Gulf of America is driven by several new projects that are set to come online in 2026. However, in 2027, the EIA forecasts that crude oil production declines will accelerate, with declines in onshore production in the rest of the Lower 48 states continuing and offshore Gulf of America production also declining.
Conclusion
The EIA’s latest STEO provides a comprehensive outlook for U.S. crude oil production over the next two years. The decline in production is attributed to sustained lower crude oil prices, which will result in a pullback in drilling and completion activity. The EIA expects U.S. crude oil production to remain close to the 2025 average on an annual basis in 2026 before falling by 340,000 barrels per day in 2027. The STEO also highlights the importance of the Permian basin and other regions in contributing to overall U.S. crude oil production growth. As the energy landscape continues to evolve, the EIA’s STEO provides valuable insights and projections for industry stakeholders and policymakers.
