One of the declared targets of the U.S. administration is energy independence. As part of this goal, domestic crude oil production is set to be increased by 3 mbpd during the current presidential term. This may seem ambitious, yet what stands out is that U.S. crude oil output remains robust. According to the latest data from the Energy Information Administration (EIA), the country’s June 2025 crude oil output reached 13.58 mbpd – a record high. Looking at the broader horizon, the rise of the shale oil industry propelled the United States to become not only the world’s largest oil consumer but also its largest producer, with output more than doubling between 2012 and 2025.

There are, however, clear limitations to sustaining this trajectory. This is aptly illustrated in the accompanying chart, which shows a steady decline in U.S. rig counts, as reported weekly by service firm Baker Hughes. These data are widely regarded as a leading indicator of upcoming production. In the past, falling rig counts were more than offset by efficiency gains. For example, in 2018, rig counts exceeded 800 while production stood at 12.3 mbpd. In the following seven years, rig counts halved while output climbed well above 13 mbpd. But rig numbers have now fallen so low – and are projected to decline further – that technological improvements alone will no longer be able to compensate for the shortfall.

The growth in domestic crude oil production is slowing and is seen contracting in the not-so-distant future. According to the EIA, the forecast 2025 output increase of 200,000 bpd compares with an expansion of 939,000 bpd in 2023 and 292,000 bpd in 2024. Growth is expected to reverse next year, with output falling from the projected 13.41 mbpd this year to 13.28 mbpd in 2026.

In the meantime, oil producers – particularly International Oil Companies (IOCs) – are heeding the U.S. president’s “Drill, Baby, Drill” call. However, the renewed search for new reserves is increasingly focused on prospects outside the U.S. Declining rig counts, shrinking domestic and expanding overseas production activity together foreshadow a comparatively tight U.S. crude oil market.

It is also noteworthy that the arbitrage – the price differential between the world’s two most important crude oil benchmarks, WTI and Brent – has remained in the range of –2/bbl to –6/bbl over the past three years, aside from expiry-related anomalies. At times, geopolitical developments or unexpected supply disruptions in major oil-producing regions may briefly push WTI’s discount to Brent to the lower end of the range. Given slowing U.S. production growth, such episodes have offered – and will continue to offer – attractive opportunities to buy the U.S. crude oil benchmark over its international peers.