By Mark Jaffe, EUCI energy writer
Growth in spending and production in the U.S. oil industry are projected to slow over the next few years, after a boom in drilling and capital spending between 2015 and 2024, according to an International Energy Agency (IEA) analysis.
Upstream oil investments are on track to fall by nearly 6% to $420 billion in 2025, according to oil company guidance while spending on gas increases 3% to $145 billion.
“Companies no longer pursue aggressive growth, and instead place greater emphasis on capital discipline, profitability and cost optimization,” the IEA analysis said. “This mantra has perhaps intensified in the past twelve months.”
The U.S. Energy Information Administration (EIA) projects crude oil production dropping from the record 13.5 million barrels a day in the second quarter of 2025 to 13.3 million barrels a day by the last quarter of 2026.
In May, active drill rigs decreased by much more than EIA projections. “With fewer active drilling rigs, we forecast U.S. operators will drill and complete fewer wells through 2026,” the agency said.
The Baker Hughes North America Rig Count June report shows rigs in the Permian Basin, straddling Texas and New Mexico, at 271 – a 12% drop from the same time last year.
The IEA forecasts that production of “light tight oil,” mainly shale oil, will increase modestly by 360,000 barrels a day between now and 2030 reaching 9.8 million barrels a day.
Meanwhile, the IEA projects, conventional oil production in the lower 48 states will decline by 42,000 barrels a day, and federal offshore output after rising between 2024 and 2028 will drop by 300,000 barrels a day to 1.6 million barrels a day in 2030.
While light tight oil continues to be the major spur for the growth in U.S. oil, annual production will rise only be 0.5%, supported solely by the Permian Basin, it is a stark contrast to the past 10 years.
Between 2015 to 2024, the U.S. accounted for 90% of the increase in global oil supply, as the shale boom boosted oil production by more than 8 million barrels a day.
There are several factors slowing shale oil output, the IEA said. Shale wells have sharp decline rates, compared to conventional wells, so operations require continuous drilling and fracking to maintain production.
A survey by the Federal Reserve Bank of Dallas of operators in its region calculated that existing wells need an average oil price of $41 a barrel to cover operating expenses and $65 a barrel to profitably drill new wells.
From April 2024 to May 2025, the spot price of a barrel of West Texas Intermediate (WTI) crude, which includes shale production, fell to $62.17 a barrel from $85.35, before rising again to $73.84 on June 20.
Another element limiting production is a record low number of drilled but uncompleted wells (DUCs) in shale basins. These are wells that have been initially drilled, but not hydro-fractured. The number of such wells rose sharply during the COVID pandemic.
DUCs are at their lowest level since the federal government started tracking them in 2013, having fallen 15% to 5,300 wells in the last two years, according to the EIA.
In its 2024 assessment, the IEA had projected the U.S. adding 2.1 million barrels a day to global supplies. “The reassessment of U.S. shale prospects compared to … 2024 is due to lower prices that have prompted shale producers to scale back activity and industry consolidation,” the agency said.
Slowing demand will also damper production. Demand is forecast to rise 2.5 million barrels a year from 2024 to 2030 and then plateau at a total annual demand of 105.5. million barrels a day by the end of the decade.
“Over the past decade, oil market dynamics have been defined by the parallel growth in U.S. oil supply and Chinese oil demand,” the IEA said.
While the U.S accounted for 90% of the increase in global oil supplies, Chinese demand was up almost 6 million barrels a day or 60% of the global increase in oil use.
By 2030, however, due to China’s strong adoption of electric vehicles, compressed natural gas trucks, the development of its high-speed rail network, and changes in the economy, the IEA expects the country’s oil demand to plateau.
“The pace of expansion in U.S. oil production is slowing as oil companies scale back investments,” the IEA said, “but it nevertheless remains the largest contributor to non-OPEC+ growth in the forecast.”
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