Speculation grows about US shale drillers ramping up activity

Expectations of increased activity came amid a surge in oil prices but with these prices continuing to fluctuate, nothing is certain

What: Speculation has been growing over the likelihood of shale producers stepping up drilling.

Why: Crude prices have surged amid the turmoil in the Middle East.

What next: With prices dropping again this week and continuing to fluctuate, much remains uncertain.

There has been growing speculation that US shale drillers could step up activity amid surging crude prices. This comes against the backdrop of the conflict in the Middle East and represents a turnaround from the days immediately following the attack on Iran by the US and Israel, when it was widely believed that shale producers were unlikely to ramp up drilling.

As the conflict continued and oil prices remained elevated, expectations began to change. However, after prices tumbled again this week following the announcement of a two-week ceasefire between the US and Iran, it looks like shale producers could hold off on making any immediate decisions given ongoing uncertainty about what will happen next.

Nonetheless, crude prices remain significantly higher than they had been. West Texas Intermediate (WTI) prices had been fluctuating at around $65 per barrel in the days before the attack on Iran at the end of February, and were trading at around $99 per barrel on April 9. While this represented a climbdown from highs of near $115 per barrel earlier this week, prices were already on the rise again amid concerns over the fragility of the ceasefire following a series of Israeli strikes against Lebanon.

Despite the uncertainty, there is still a broad expectation that prices will remain comparatively higher than they had been in January and February. And as a result, shale producers could commit to stepping up activity before the cost of oilfield services rises too.

Changing expectations

If shale drillers do go ahead with a ramp-up in drilling, this would mark a turnaround from several years of these companies acting cautiously regardless of what oil prices were doing. In addition, active rig counts typically lag oil prices by up to four months, so any uptick can take time to materialise.

In 2022, US oil-focused rig counts rose gradually from 520 right before Russia invaded Ukraine, causing oil and gas prices to spike, to a high of 627 recorded in late November and early December of that year. Thereafter, the oil-focused US rig count trajectory was one of steady decline until the second half of 2025, and since around August 2025, the oil rig count has fluctuated at around 410 active rigs.

In the Permian Basin – the focus of US shale producers’ attention in recent years, with oil being the primary target – active rig counts rose from 306 the week prior to Russia’s attack on Ukraine to 350 at the end of 2022. The Permian count then peaked at 357 in April 2023. The relatively modest rise over several months at that point illustrates shale drillers’ conservative approach to adding new rigs despite the spike in oil and gas prices, with the WTI price peaking at almost $122 per barrel in June 2022.

If a significant uptick in rig counts does materialise this year in line with past trends, it could become visible in the summer. But while shale drillers initially indicated that they would continue to proceed with caution regardless of oil price trends, concerns over rising supply chain and service costs could compel them to increase activity while it is cheaper to do so.

According to a Federal Reserve Bank of Dallas estimate from the first quarter of 2026, shale drillers need oil prices of $62-70 per barrel in order to profitably drill a new well. And with crude prices significantly above this despite this week’s ceasefire announcement, the current price environment is favourable for encouraging new drilling.

Against this backdrop, various industry observers have voiced expectations that drilling and production will rise.

“Elevated prices are certainly going to increase production in the United States,” industry lobby group the American Petroleum Institute’s CEO, Mike Sommers, told Bloomberg Television. “You are going to see that over the course of the next few months.”

Meanwhile, the US Energy Information Administration (EIA) in its latest Short-Term Energy Outlook (STEO), released this week, raised its Brent spot price forecast for 2026 to $96 per barrel. This represents a 22% increase compared with the agency’s previous forecast of $79 per barrel, released a month ago. While Brent is more exposed to disruption in the Strait of Hormuz than WTI, this nonetheless illustrates the pace at which forecasts and expectations are changing. Meanwhile, the EIA now anticipates that the WTI spot price will average $87.41 per barrel in 2026, up from a forecast of $73.61 per barrel in the March STEO and $53.42 per barrel in the February report, which was released prior to the outbreak of war in Iran.

The EIA now projects that US crude production will fall from 13.59mn barrels per day (bpd) of oil in 2025 to 13.51mn bpd in 2026 and then rise to 13.95mn bpd in 2027. The 2027 figure represents an increase from 13.83mn bpd projected in the March STEO and a more significant turnaround from the February forecast, when the EIA was projecting that US oil output would peak decline to 13.32mn bpd in 2027 after staying flat in 2026.

Meanwhile, Bloomberg cited other forecasts this week that also see US oil production rising. For example, Enverus now anticipates that US oil supply will grow by 240,000 bpd over the course of 2026 to a record 13.9mn bpd. Meanwhile, Rystad Energy is projecting growth of 191,000 bpd in the Lower 48 US states, marking a turnaround from its pre-war expectations of an 80,000 bpd decline.

“Recent days have seen the first public indications that US oil exploration and production (E&P) companies intend to add activity in response to higher prices,” wrote Rystad’s head of North America oil and gas research, Jai Singh, in a market update on April 8. “More may follow, especially as the disconnect between physical and financial markets for oil begins to reverberate through the forward curve,” Singh continued. “The tentative reopening of the Strait of Hormuz reinforces caution as players seek to reposition activity in an oil price environment that could turn on a dime. If momentum behind activity addition becomes clear, the ‘wait and see’ logic could turn quickly to one of ‘don’t miss the boat’ on service costs.”

What next?

Rystad also pointed to the fact that privately held Continental Resources had already announced plans to increase its capital expenditure budget by 15-20% this year. Prior to the war, the company had been targeting a capex cut of around 20% year on year (y/y).

Rystad said that other private E&Ps were likely mulling similar moves to raise capex and that some public players could follow during first-quarter reporting in May. The market narrative, the consultancy said, could quickly change from caution to urgency.

“Once some companies add rigs and hydraulic fracturing crews, others are likely to quickly follow in order to lock into contracts before service prices escalate more,” Rystad said.