The Permian Basin continues to dominate the U.S. oil production landscape, while other maturing Lower 48 basins are grappling with stagnation or decline. According to the U.S. Energy Information Administration’s (EIA) January 2025 Short-Term Energy Outlook, crude production outside the Permian Basin is projected to remain flat this year and begin declining in 2026. The EIA forecasts that non-Permian Lower 48 oil production will decrease by approximately 170,000 barrels per day, or 4%, by 2026. This downturn is driven by lower drilling and completion activity, a response to declining crude oil prices, as well as limited well productivity, takeaway capacity, and access to international markets.
In contrast, the Permian Basin remains the driving force behind U.S. oil production growth. The EIA projects that Permian oil output will grow by 300,000 barrels per day in both 2025 and 2026, reaching 6.6 million barrels per day in 2025 and 6.9 million barrels per day the following year. The region’s abundant resources and infrastructure, combined with strong investor confidence, have made it the centerpiece of the nation’s oil industry. Major producers, including Exxon Mobil, Chevron, ConocoPhillips, Occidental Petroleum, and Diamondback Energy, are continuing to expand their operations in the Permian. Exxon Mobil has further cemented its leadership in the basin following its $60 billion acquisition of Pioneer Natural Resources in May 2024, a transformational deal that has reshaped the competitive landscape.
The Gulf of Mexico is also expected to play a role in boosting U.S. oil production. Forecasts indicate that production from the Gulf will increase to 1.8 million barrels per day in 2025, bolstered by major offshore developments. Shell recently announced the first oil from its Whale floating production facility in the Alaminos Canyon Block 773. This project, operated by Shell Offshore with a 60% stake and Chevron USA holding the remaining 40%, began producing less than eight years after its discovery in 2017. Chevron also marked a significant milestone last summer with first oil from its Anchor project, the first production from any super high-pressure formation in the Gulf of Mexico at 20,000 psi. Experts believe the success of Anchor could open the door for future projects in ultra-deep, ultra-high-pressure fields in the Gulf.
As capital investment and mergers and acquisitions continue to pour into the Permian Basin and the Gulf of Mexico, other U.S. oil-producing regions may see reduced activity and declining output. With shifting dynamics in the Lower 48, the Permian and the Gulf are set to solidify their roles as the primary engines of American oil production growth in the coming years.
