US crude oil production is on track to reach a record this year as higher prices encourage producers in the Permian Basin to keep drilling, the Energy Information Administration said in a note on Thursday.
Output is projected to average 13.8 million barrels per day in 2026, exceeding last year's record of 13.7 million b/d, the EIA analysts said, citing the agency's Short-Term Energy Outlook. Production averaged 13.7 million b/d in H1 2026, up about 2% from the same period a year earlier.
Trinity Manning-Pickett, an applied economist at the EIA, said that most of this expansion is concentrated in the Permian region in Texas and New Mexico and the Gulf of Mexico.
Permian production is forecast to average 6.8 million b/d in 2026, a 3% increase from last year. Higher crude prices have supported the gains, with West Texas Intermediate averaging about $84 per barrel through August, up from $65 last year.
The EIA said that the price level is well above estimated breakeven costs in the region. Oil executives surveyed by the Dallas Federal Reserve in March reported average breakeven prices of about $69/bbl in the Midland Basin and $63 in the Delaware Basin, the two largest basins in the Permian.
The agency said that higher prices have encouraged companies to direct more drilling toward oil production, helping lift output even as producers remain focused on capital discipline.
Meanwhile, the Gulf of Mexico is also contributing to the production increase. Crude output there rose about 10% to 200,000 b/d higher in H1 2026 from a year earlier, with full-year production forecast to rise 3%, or about 100,000 b/d.
Several large offshore projects that started production over the past year are driving the increase.
The EIA said these include the Shenandoah floating production unit, which has averaged about 70,000 b/d since starting up in July 2025, and the Ballymore subsea tieback, which has produced about 58,000 b/d since April 2025.
The Whale floating production unit has averaged 38,000 b/d since coming online in January 2025, while the Salamanca project has added about 25,000 b/d since starting production late last year.
Four additional smaller projects are projected to begin production by the end of 2026, the agency said, further supporting Gulf output.
Hurricanes remain a risk to offshore production and the timing of new project developments. However, the 2026 Atlantic hurricane season is expected to be milder than normal, according to Colorado State University, which cited the influence of El Nino conditions.
The record US production forecast comes as global oil markets remain sensitive to supply disruptions and geopolitical risks, with higher crude prices improving production economics in key US shale regions.