At this year’s CERAWeek by S&P Global, Mike Wirth, CEO of Chevron, stated that US shale oil production has “probably” plateaued over the past six to twelve months.
US oil production is approaching a plateau, not because of resource limits, but due to structural constraints in the system. US oil production has remained relatively flat at ~12.7 MMbbl/d over the past 10 months (April 2025–January 2026), with month-to-month fluctuations generally within ±5% and negligible net change over the period. Our analysis of TGS basin-level production and Baker Hughes rig activity shows that while overall US output is stable, the underlying drivers have diverged (Figure 1). Production growth in basins, other than the Permian, continues to track rig count closely and shows slight improvement in new well productivity. The Permian Basin, on the other hand, shows stagnant to declining production growth with mostly stagnant rig count. The key insight is that US supply is no longer purely price responsive; growth is increasingly capped by infrastructure and new well productivity in its premier basin. Until midstream constraints are resolved, incremental US oil supply will be limited, even in supportive price environments.
Figure 1. US Oil Production by Basin with Total US Rig Counts (sourced from Baker Hughes).
In plays such as the Bakken Formation (Williston), Eagle Ford Shale (Gulf Coast), and Anadarko Basin, rig count reductions of roughly 10–20% have translated into proportional production declines after a lag of about 4–6 months, consistent with historical trends. In contrast, the Permian has maintained relatively flat production at ~6.2 MMbbl/d even as rig counts have declined by 10–13% year-over-year, indicating a shift away from growth and toward maintenance-mode development. The primary constraint is gas takeaway capacity. As associated gas volumes rise, limited pipeline infrastructure restricts the ability to increase oil production. Until new pipelines such as Blackcomb (~2.5 Bcf/d of takeaway capacity) and Hugh Brinson (~1.5 Bcf/d initially) add a combined ~4.0 Bcf/d of gas takeaway capacity by year-end 2026 (Figure 2), producers will struggle to move associated gas, and therefore crude, out of the basin.
Figure 2. Permian Basin Gas Production with Takeaway Capacity Estimates.
According to a recent Dallas Fed Energy Survey, geopolitical volatility, particularly from the ongoing Iran conflict, has amplified uncertainty in the US energy markets. While shale has the capacity to expand production if needed, operators face higher costs, unpredictable commodity prices, and midstream constraints that limit how quickly output can respond. Respondents noted that the duration of international hostilities and the timing of pipeline expansions will strongly influence capital expenditure decisions. Despite these uncertainties, US producers remain strategically well-positioned to meet global demand, though growth is increasingly dependent on infrastructure and timing rather than price alone.
The result is a US oil supply system that is both structurally constrained and geopolitically sensitive. Plateauing production in the Permian, infrastructure-driven limits, and price- and rig-responsive declines in secondary basins, combined with global market volatility, mean future production gains will be slower, more distributed, and increasingly dependent on midstream capacity and geopolitical stability. Operators must navigate a market where infrastructure and global events increasingly outweigh traditional price signals, balancing short-term opportunities with longer-term investment decisions.
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