By Georgina McCartney
HOUSTON (Reuters) -The falling number of oil and gas rigs deployed across the United States is reaching a level that would indicate onshore crude output from the world’s top producer could fall in early 2026.
U.S. energy companies are producing record amounts of oil, much of it from onshore shale fields. New techniques and technology, like longer lateral wells, automation and more powerful equipment, have driven productivity gains across the industry that have allowed oil companies to pump more with fewer rigs and less capital.
But the number of rigs working in U.S. shale fields has almost fallen so low – and is projected to keep falling – that those improvements will not be enough to keep onshore U.S. production rising, or even steady in some basins, analysts say.
The anticipated decline comes as U.S. President Donald Trump seeks to raise oil and gas output, and as OPEC+ lifts its production targets in an attempt to take back market share from the U.S. and other rival producers.
In April 2019, the last time over 1,000 rigs were consistently deployed across the U.S., oil output stood at 12.14 million barrels per day (bpd). Today, there are just 540 rigs in operation, while output has jumped to some 13.5 million bpd.
Those close to the industry say that balance is fast approaching a tipping point, with analysts forecasting the rig count to fall further and U.S. onshore production to subsequently decline next year and into 2027.
Lower 48 oil output is expected to fall by 200,000 bpd next year, followed by a further decline of 130,000 bpd in 2027, as operators drop rigs in response to persistently low oil prices, Wood Mackenzie analysts said.
At the current rig count of 540, energy analytics firm, Novi Labs forecasts a 400,000 bpd drop in lower 48 production by the end of next year, with losses upwards of 200,000 bpd within the first few months of 2026.
The U.S. Energy Information Administration in July also said it expects recent declines in rig counts and well completions to continue, pointing to lower crude prices.
ALL EYES ON THE PERMIAN
The recent decline in oil prices has prompted companies to shed rigs at an elevated rate. In the Permian basin – the largest U.S. oil field, spanning from Texas to New Mexico – some 24 rigs were dropped over a ten-week period beginning in May, according to energy services firm Baker Hughes. During that period, prices plunged as the Organization of the Petroleum Exporting Countries accelerated plans to increase output.
Companies have been using newer, more efficient oil rigs, with improvements like autonomous drilling capabilities, more powerful horsepower, and technology that enables them to move without being taken down and rebuilt.
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