The slowdown stems from weaker growth in key regions and falling prices. The Permian Basin remains dominant, but it is no longer sufficient to sustain national expansion. Moreover, infrastructure limits and tighter capital discipline weigh on new investments.
Meanwhile, older basins, such as the Eagle Ford and Bakken, continue to decline due to lower drilling activity and natural depletion. Offshore gains from Alaska and the Gulf of Mexico remain modest and slow-moving, adding little support.
Supply-Demand Imbalance Caps Oil Price Potential in 2026
According to the EIA, WTI crude oil (CL) is expected to average $51 per barrel in 2026. Brent crude (BCO) is expected to follow closely. This forecast reflects a surplus environment where global inventories continue to build. As of late 2025, stockpiles already exceed the five-year average. With supply growing faster than demand, producers face tighter margins and falling cash flows.
In response, U.S. oil firms are shifting strategies. Instead of expanding output, many now focus on capital discipline and shareholder returns. Lower prices discourage investment in higher-cost regions, especially offshore and frontier shale. Meanwhile, global demand growth remains soft. Efficiency gains and slower transportation fuel usage dampen the outlook, even in recovering economies.
These forces combine to create a fragile setup. Any lack of coordination among producers could worsen the oversupply. At the same time, sustained underinvestment increases the risk of a future shortage. However, the oil market remains under pressure in 206 from rising inventories, flat U.S. production, and cautious spending behaviour across the industry.
