In a market update sent to Rigzone recently, Matthew Bernstein, Rystad Energy VP North America Oil & Gas, noted that, even as U.S. benchmark West Texas Intermediate (WTI) prices sit above $90 per barrel, U.S. shale producers “are not poised to quickly ramp up production”.

Bernstein outlined in the update that this is for “two major reasons; strategic caution and a lack of DUCS [drilled, uncompleted wells] to quickly bring online”. 

“Producers are currently using the opportunity to lock in higher revenues through hedging,” Bernstein said in the update.

“Unless high prices last for months, shale E&Ps are unlikely to revise their plans, which budgeted for a challenging $55-60 WTI price,” he added.

In the update, Rystad stated that the capital discipline of public U.S. shale producers is underpinned by cautiousness about short-term movements in price, “and the prevailing belief is that the price spike will be short lived, especially as the WTI curve remains in steep backwardation”.

“Second, DUC availability is limited,” the company added.

Rystad noted in its update that low prices in 2025 saw producers focus in on maintaining output and shareholder payouts while cutting capital expenditure.

“As a result, companies drew down excess DUC inventories and allocated cash to their balance sheet,” the company said.

“Even if producers are willing to grow, their ability to increase output quickly is hampered by last year’s DUC drawdown,” it added.

Rystad projected in its update that, in an accelerated drawdown of excess DUCs, U.S. shale could add 111,000 barrels per day of supply from these wells alone in the next few months. The company added, however, that “the accelerated drawdown remains unlikely as it would take a concerted strategic effort by many operators to achieve”.

“In reality, some operators, likely private E&Ps will choose to take advantage of the price spike by bringing DUCs online, but many publics and supermajors will likely be wary of draining their productive capacity further,” Rystad said.

So, what are the possible scenarios for how U.S. production could respond to the war in the Middle East, Rystad asked in the update.

“In a scenario where operators react to sustained high prices with a material increase in rigs over the next five months (46 total rigs added in Lower 48 oil plays), production would grow 196,000 barrels per day from exit 2025 rates to exit 2026,” the company projected, responding to the question.

“This is 280,000 barrels per day higher in December 2026 than our pre-war base case,” it highlighted.

Rystad pointed out in its update that a second, “maximum case” scenario “assumes a significant effort to ramp up production across the Lower 48”. It noted, however, that this remains “extremely unlikely, but reveals the theoretical upside potential in the short-term: aggressive activation of nearly all available rigs (about 60) over the next three months with some improved cycle times”.

“Here, we see exit-to-exit growth for 2026 at 279,000 barrels per day in the Permian and 101,000 barrels per day elsewhere. This correlates to 464,000 barrels per day upside in December 2026 from our February production outlook. By the end of 2027, this scenario would see upside of 500,000 barrels per day,” it added.

In the update, Rystad said it expects operators to apply a similar strategy to rig additions.

“Rather than make any immediate rig additions or DUC drawdowns, producers are choosing a more disciplined strategy,” it noted.

“First, they are looking to layer on hedges for 2Q26 into 2027, especially if they believe prices may come down. Initial market intelligence indicates operators have been actively hedging,” it added.

“However, E&Ps built hedge books for 2026 with downside protection in mind. With the peer group having only about one-third of production hedged at low floor and ceiling prices, many may simply to enjoy the spot exposure,” it continued.

“Private E&Ps who budgeted for near-breakeven prices may be first to add an additional rig or frac crew to take advantage of prices in 2H26 which, even if they did come down considerably from $90-100, would still be stronger than what they had originally planned for,” it went on to state.

Rystad stated in its update that cash on balance sheets for pure shale E&Ps as of year-end 2025 was down over $4 billion compared to year-end 2024, “as E&Ps used cash reserves to maintain payouts to investors”.

“With this in mind, producers will be in no rush to spend more capex in response to higher prices, and they will likely use the current period to rebuild cash on balance sheets at $100 oil while waiting to make any moves,” Rystad said.

Rigzone contacted the American Petroleum Institute (API), the U.S. Department of Energy (DOE), and the U.S. Energy Information Administration (EIA) for comment on Rystad’s market update. The EIA declined to comment. At the time of writing, the API and DOE have not responded to Rigzone.

The EIA noted in its latest short term energy outlook (STEO), which was released on March 10, that “higher crude oil prices lead to more U.S. crude oil production” in its forecast.

In its March STEO, the EIA projected that total U.S. crude oil production, including lease condensate, will average 13.61 million barrels per day in 2026 and 13.83 million barrels per day in 2027. The EIA’s previous STEO, which was released in February, forecast that total U.S. crude oil output, including lease condensate, would come in at 13.60 million barrels per day this year and 13.32 million barrels per day next year.

The EIA projected in its latest STEO that Lower 48 States, excluding the Gulf of America, will produce 11.17 million barrels per day in 2026. In 2027, the EIA sees Lower 48 States, excluding the Gulf of America, producing 11.50 million barrels per day.

The EIA’s February STEO saw Lower 48 States, excluding the Gulf of America, producing 11.15 million barrels per day in 2026. That STEO projected that Lower 48 States, excluding the Gulf of America, would produce 10.96 million barrels per day in 2027.

“Because changes in oil prices take time to affect production – moving from investment decisions to rig deployment to well completion and first oil – the effect of higher prices in our forecast is more pronounced in 2027 than in 2026, with production increasing from 13.4 million barrels per day in September 2026 to 13.8 million barrels per day in 2027,” the EIA said in its STEO.

The EIA stated in its March STEO that the higher prices support increased drilling activity across most basins and noted that expanded pipeline capacity in the Permian region allows more associated natural gas to be brought to market, “further supporting oil-directed operations”.

“We increased our forecast for crude oil production in the Permian region by six percent in 2027 as new pipeline capacity and price incentives support growth,” the EIA pointed out in its March STEO.

The EIA describes itself as the statistical and analytical agency within the DOE in its latest STEO.

“By law, our data, analyses, and forecasts are independent of approval by any other officer or employee of the U.S. Government,” the EIA notes in its STEO, adding that the views in its STEO “do not represent those of DOE or any other federal agencies”.

The API states on its website that it represents all segments of America’s natural gas and oil industry, which it says supports nearly 11 million U.S. jobs.

“Our approximately 600 members produce, process and distribute the majority of the nation’s energy,” the API’s site highlights.

To contact the author, email andreas.exarheas@rigzone.com