A year on from ‘drill, baby, drill’, why are there fewer oil rigs in the US?

Core Viewpoint - The article discusses the contradictions in the US oil industry, highlighting the impact of Trump's policies on permitting, rig counts, and production levels amidst fluctuating oil prices and demand. Group 1: Policy Changes and Regulatory Environment - In April 2025, the US Department of the Interior announced emergency permitting procedures, reducing timelines to a maximum of 28 days [1] - Trump's administration has focused on permitting reforms and reducing bureaucracy to incentivize domestic oil producers [2] - The 'One Big Beautiful Bill' provided billions in federal tax breaks for fossil fuel companies and planned 30 offshore lease auctions in the Gulf of Mexico over the next 15 years [7] Group 2: Production and Rig Count Trends - US crude oil production reached a record high of 13.84 million barrels per day (mbbl/d) in September 2025, up from 13.171 mbbl/d in September 2024 [4] - The US rig count stood at 544 on 26 November 2025, a decline of 38 from the previous year, with oil rigs specifically down 15% from 477 to 407 [5] - The traditional link between rig activity and output has weakened, with production at record highs despite reduced rig counts [4][14] Group 3: Market Dynamics and Economic Factors - The declining rig count is attributed to a wider softening of demand in the global market due to lower oil prices and high project costs [11] - OPEC's decision to increase output targets in 2025 has contributed to lower oil prices, creating an oil glut [12][13] - Political volatility and uncertainty surrounding Trump's policies have affected market confidence, leading to cautious behavior among oil producers [8][9] Group 4: Technological Advancements and Efficiency - Improvements in drilling efficiency, including longer laterals and the use of electric hydraulic fracturing, have driven productivity levels up [16][18] - The average length of laterals in the Midland Basin in the Permian region was 58% longer in 2025 compared to 2015, with over 50% of wells completed spanning more than 10,500 feet [17] - AI is being adopted to enhance efficiency in identifying high-productivity areas and optimizing exploration processes [19][20] Group 5: Future Outlook - The number of oil rigs under committed utilization in the US is expected to increase across 2026, although the number of rigs under contract will be weak [22] - The EIA forecasts that US crude oil production will average 13.4 mbbl/d in 2025, with a slight decline in 2026, followed by an increase to 14 mbbl/d in 2027 [23] - Despite a decline in drilling activity, the Permian region is expected to see increased crude oil production, indicating a waning relationship between rigs and production [25]