Projected crude-oil dip undercuts "drill baby drill" symbolism
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Fresh projections add weight to a problem for President Trump's "drill baby drill" push — many companies won't follow along in this price and tariff landscape.
The big picture: A revised outlook from DOE's independent stats arm shows U.S. crude output sliding in the second half of 2025, and a small year-over-year drop in 2026.
- It would be the first annual decline since COVID battered demand in 2020-2021.
Why it matters: Yes, the revisions are small and yes, the U.S. remains by far the world's top producer.
- But the symbolism is big as the White House promotes its "energy dominance" agenda.
State of play: The Energy Information Administration yesterday estimated that U.S. output will dip 0.3% to average 13.37 million barrels per day in 2026.
- It's the latest in several downward revisions this year, but the first that sees a decline — last month's version still estimated a very small rise over 2025.
Driving the news: EIA cited a steeper-than-expected drop in active rigs, adding "we forecast U.S. operators will drill and complete fewer wells through 2026."
- S&P Global Commodity Insights goes further, projecting that 2026 will slide to an average of just under 13 mbd.
The intrigue: Onshore shale is the biggest part of U.S. output.
- One big question is whether a total U.S. production decline next year would be a blip or an inflection point — at least without far higher prices on a sustained basis.
- Remember that in early May, the CEO of Permian Basin heavyweight Diamondback Energy told shareholders that onshore U.S. production has likely peaked.
What they're saying: "It's peak shale at this price," oil analyst Rory Johnston, founder of Commodity Context, tells Axios.
- "This is not a geological or kind of a fatalistic peak, but rather an economic one," he said in an interview.
- The current prices and cost structure, especially with tariffs pushing costs up, "is not conducive to profitability for these firms, so they're going to start pulling back."
Yes, but: Lots of caveats here. One is that Trump's "dominance" agenda isn't only about crude, but rather LNG and more.
- Another is that Trump 2.0 officials are keen to create more access for long-lead time projects outside the shale patch, like offshore areas and Alaska.
- Oh, and projecting U.S. production is a notoriously tricky, multi-variable thing — these rolling EIA outlooks are just snapshots in time.
What we're watching: Trade negotiations with China, India and other nations.
- Trade wars are bearish for demand and hence global crude prices.
