New data from the U.S. Energy Information Administration (EIA) shows output rose by about 3 per cent, or 350,000 b/d, compared to 2024. The increase came despite a 5 per cent drop in active rigs and fewer wells drilled, highlighting a structural shift in how U.S. producers are growing supply.

The gains reinforce the United States’ position as the world’s largest oil producer and contribute to expectations of a global supply surplus. Reuters has reported that rising U.S. output is a key factor behind forecasts of an oversupplied global market, with production expected to average roughly 13.6 million b/d in 2025.

Efficiency offsets lower prices

The 2025 production increase came as benchmark West Texas Intermediate (WTI) crude prices fell to about $65 per barrel, down from $77 in 2024. Normally, lower prices would dampen output, but U.S. producers continued to extract more oil from fewer wells.

New wells added 2.9 million b/d of production in 2025, while existing wells accounted for 8.3 million b/d. Industry analysts have increasingly pointed to productivity gains — including longer laterals, improved fracking techniques, and better data analytics — as the main driver of growth.

Bloomberg has similarly reported that U.S. shale producers are pumping more oil per dollar invested, allowing output to rise even as capital spending and rig counts decline.

This decoupling of production from drilling activity marks a significant evolution in the shale sector, where companies have shifted focus from rapid expansion to capital discipline and efficiency.

Permian dominates growth

As in previous years, the Permian Basin remained the engine of U.S. production growth. Output in the region rose by 280,000 b/d in 2025 to reach 6.6 million b/d — nearly half of total U.S. supply.

Low breakeven costs continue to underpin Permian growth. According to the Dallas Fed Energy Survey, operators in the Midland and Delaware basins reported breakeven prices of roughly $61–$62 per barrel in 2025, below the annual average oil price. That cost advantage has allowed producers to sustain output even in a weaker price environment.

By contrast, other major shale regions showed limited growth. Production in the Eagle Ford rose modestly to 1.2 million b/d, while the Bakken saw a slight decline to a similar level.

Together, the Permian, Eagle Ford, and Bakken account for nearly two-thirds of total U.S. crude production.

Offshore projects add supply

Production in the Gulf of America also contributed to overall growth, rising by 111,000 b/d to average 1.9 million b/d in 2025.

Five new offshore projects — Whale, Ballymore, Dover, Shenandoah, and Leon-Castile — came online during the year. Unlike shale operations, offshore developments are less sensitive to short-term price fluctuations due to their long lead times and high upfront capital costs.

This steady pipeline of offshore projects is helping to diversify U.S. supply growth beyond shale basins.

Global implications

The global outlook for oil markets has shifted rapidly in recent weeks. The war in Iran and severe disruptions to shipping through the Strait of Hormuz — which typically carries about one-fifth of global oil — have tightened supply and driven prices sharply higher. With tanker traffic collapsing and infrastructure under attack, the market is moving away from fears of oversupply toward a more constrained and volatile environment.

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The United States exported an average of 4.0 million barrels per day (b/d) of crude oil in 2025, a 3 per cent drop from 2024, marking the first annual decline since 2021. The decrease came primarily from reduced shipments to Europe and to the Asia–Oceania region, historically the largest markets for U.S. crude.

Despite the drop in exports, overall U.S. net crude imports also declined, falling from 2.5 million b/d in 2024 to 2.2 million b/d in 2025, because imports fell by an even greater amount.

The export slowdown is notable given that U.S. crude production rose 3 per cent in 2025 to a record 13.6 million b/d. Instead of flowing to overseas buyers, more of that production went into domestic stockpiles—including the Strategic Petroleum Reserve (SPR)—and to U.S. refineries.

Since the early 2010s, U.S. crude exports have expanded dramatically. Driven by the shale boom, new pipeline and port infrastructure, and strong global demand for light, low-sulphur crude, exports have surged since Washington lifted its decades-old crude export ban in 2015. By comparison, exports in 2025 were about 85 times higher than in 2011.

Europe remained the largest destination for U.S. crude oil, although exports to the region fell 7 per cent in 2025.

European demand for American crude surged after Russia’s invasion of Ukraine in 2022 disrupted global oil flows and forced European refiners to replace Russian supplies. In 2023 the region overtook Asia as the largest market for U.S. crude.

But in 2025, according to the EIA, some U.S. volumes were displaced as OPEC producers increased output, allowing European refiners to diversify supply sources.

The United Kingdom saw the largest decline among European buyers, with imports of U.S. crude falling more than 100,000 b/d, or roughly 35 per cent, year over year.

Even with the decrease, exports to Europe remain higher than they were before the Ukraine war reshaped global oil trade patterns.

Exports also dropped sharply to the Asia and Oceania region, particularly to Singapore and China. U.S. shipments to Singapore fell 75 per cent, while exports to China plunged 89 per cent compared with 2024.

China had been the second-largest destination for U.S. crude in 2023, but purchases have fallen sharply over the past two years as Chinese refiners turned increasingly to Middle Eastern and Russian supplies that often trade at discounted prices.

Some Asian buyers, however, increased imports. India boosted purchases of U.S. crude by about 90,000 b/d, while Japan increased imports by roughly 80,000 b/d.

In Europe, the Netherlands imported about 80,000 b/d more U.S. crude in 2025 than the previous year, partly reflecting the country’s role as a major refining and trading hub.

Another notable new buyer is Nigeria. U.S. exports to the country rose from about 40,000 b/d in 2024 to around 110,000 b/d in 2025.

The increase coincides with the launch of the massive 650,000 b/d Dangote refinery, which began processing crude in early 2024 and reached its designed capacity in February 2026. As the refinery ramped up operations, Nigeria increasingly turned to imported crude, including supplies from the United States.

The decline in U.S. exports appears largely driven by market dynamics rather than geopolitical conflict, analysts say. Higher OPEC production, shifting refinery demand, and domestic stock builds in the United States played a larger role than any single geopolitical event.

While tensions in the Middle East—including the Iran conflict—have added volatility to global oil markets, major news outlets such as Reuters and Bloomberg report that the primary structural shifts in crude flows over the past two years have been tied to OPEC supply changes, refinery economics, and evolving trade patterns following Russia’s war in Ukraine.

Even with the 2025 decline, the United States remains one of the world’s largest crude exporters and a central supplier to global oil markets.

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