What will happen to U.S. oil production and prices in '26?

The U.S. Energy Information Agency is forecasting a decline in domestic oil production in the coming year, after four consecutive years of output increases. And the EIA is predicting the average price for West Texas Intermediate next year will be $14 per barrel less than the 2025 average.

The world is producing more oil than it needs, so 2026 prices are expected to be lower. The question is how low a barrel will get.

“$50 to $60 range is what most are seeing. Now some are calling for prices to dip into the $40s,” said Garrett Golding with the Dallas Fed.

For some companies, who are finalizing drilling budgets, that’s below their break-even price to drill a new well.  

“This begs the question from a bigger picture perspective, and this is the big debate in the analyst community right now is, does U.S. production start to slide?” said Golding.

Karr Ingham with the Texas Alliance of Energy Producers expects yes, production will fall off a little bit.

“But again, it doesn't appear as though they're going to fall off much as we might have expected in previous times with lower prices,” he said.

Ingham said that’s because companies have gotten better at getting oil out of the ground – even as input costs like steel and cement have gone up. 

“One rig is much more efficient and producing a lot of crude oil than it used to be, and so we don't need as many rigs, and frankly, we don't need as many people to produce,” he said.

So, as rig counts continue to decrease,“We expect employment to be affected by that. And then what's left after the drilling companies are employees on the payrolls of operating and producing companies, and then the service companies,” Ingham said.

So it’s not necessarily a great time to be looking for a job in oil and gas, but for the people filling up their tanks in 2026, things look good.

“This is going to be the cheapest year, I think for fuel and gasoline prices since the Covid year of 2020,” said analyst Tom Kloza. “People are going to be bragging at cocktail parties about buying gas for $2.30 and things like that. And generally, you know, if you ignore pretty much everything else about the economy, you should have Americans in good cheer.” 

Of course, something unpredictable and disruptive — like a hurricane in the Gulf — could change that.