The words ‘drill, baby, drill’ were writ large across Donald Trump’s 2024 presidential campaign, and the three words have since summarised the US President’s oil and gas policy.
The US’ oil reserves as of 2024 were estimated at 45 billion barrels, the ninth-largest largest reserves globally; meanwhile, its natural gas reserves stood at 322.2 trillion cubic feet, the fourth-largest globally. Since taking office, Trump has announced his ambition for more drilling to make full use of these resources.
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However, data from Baker Hughes shows that the US oil rig count has been in steady decline since Trump’s inauguration.
The US rig count stood at 544 on 26 November 2025, a decline of 38 compared to 27 November 2024. In oil specifically, the most recent data showed that there were 407 rigs, down from 477 the year before – a decline of 15%.
Yet the picture is somewhat muddled by production levels, which have increased. US crude oil production reached a record high in September 2025 at 13.84 million barrels per day (mbbl/d), compared to 13.171mbbl/d in September 2024.
According to analysis by the US Energy Information Administration (EIA), “the traditional link between rig activity and output has weakened recently, with production at record highs despite reduced rig counts”.
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By GlobalDataImprovements in drilling efficiency, integration of AI solutions and a focus on more productive plays has driven up productivity levels. However, productivity doesn’t necessarily correlate to confidence, and the market remains somewhat hesitant as it feels out Trump’s next move.
Robert Kaufmann, Professor of Environmental Science at Boston University, explains that “any kind of uncertainty increases the real option value of keeping the oil in the ground, which would tend to slow drilling”.
As productivity trends upwards and rig commitment downwards, the US oil rig picture is increasingly becoming one of contradictions, compounded by a backdrop of relatively low oil prices and softening demand.
Trump’s impact on drilling
In brief, Trumpian policy is centred around permitting reforms and reducing bureaucracy, and the administration has sought to incentivise domestic oil producers.
Policies materialised quickly. On inauguration day (20 January 2025), Trump declared a national energy emergency, accompanied by an executive order entitled ‘Unleashing American Energy’. It directed that agencies would “suspend, revise, or rescind all agency actions identified as unduly burdensome” on domestic oil and gas operations.
In April 2025, the US Department of the Interior announced emergency permitting procedures, reducing timelines (which usually take several years) to a maximum of 28 days.
Trump’s administration has also incentivised exploration and drilling in his ‘One Big Beautiful Bill’, which provided billions of dollars in new federal tax breaks for fossil fuel companies. The bill also stated that 30 offshore lease auctions would be held in the Gulf of Mexico over the next 15 years, as well as six in Alaska’s Cook Inlet until 2032.
Indirectly, the administration is further shifting the energy focus to oil and gas by revoking offshore wind energy permits and pausing the awarding of new ones. In August, US Transportation Secretary Sean Duffy withdrew $679m of funding for 12 “doomed” offshore wind projects across the US, commenting: “Thanks to President Trump, we are prioritising real infrastructure improvements over fantasy wind projects that cost much and offer little.”
The objectives of Trump’s administration have been clear; but Trump cannot control the market response, and political volatility has created uncertainty.
Kaufmann explains: “Trump is trying to reduce regulations that should, in theory, increase drilling, but at the same time, his tariff and trade policies are generating a lot of uncertainty, which is reducing drilling.”
Analysis by GlobalData, Offshore Technology’s parent company, also noted “tariffs tensions” created when Trump “surprised the Organisation of the Petroleum Exporting Countries [OPEC] market by announcing production hikes on the same day as tariffs ‘liberation day’.” As a result, “oil prices are not expected to stabilise above $70 per barrel in 2025”.
Trump’s policies are certainly not the only factor reshaping drilling strategies, however. Cinnamon Edralin, Americas research director at Westwood Energy, comments that the declining rig count “is more a factor of a wider softening of demand that we are seeing in the global market in response to lower oil prices and continued high project costs”.
Prices are declining thanks, in part, to OPEC, which hiked members’ output targets in 2025 in a bid to regain a greater share of the market. Although targets are expected to be paused in 2026, eight OPEC members raised output targets by around 2.9mbbl/d in April. This jump followed a period of lower production, intended to keep prices high.
Paired with slowing demand, the push to increase production has resulted in an oil glut, contributing to lower prices. Add this to the uncertain geopolitical landscape, and it becomes apparent why oil producers are cautious, and real option value is growing in its appeal.
Likewise, both rig count and confidence are down, but production is up – how, though, can the two tell the same story?
Rig count down, production up: explaining the US’ oil contradiction
US crude oil production has been climbing over the last year. In January of 2025, the US was producing 13.14mbbl/d, but by September, that had reached 13.844mbbl/d.
In an email to Offshore Technology, a spokesperson for the EIA acknowledged “the weakening (though not the dissolution) of the relationship between rigs and production in the recent past”.
Rig count is no longer a direct indicator of market health. Edralin instead points to committed utilisation (committed rigs either currently under contract or with a future firm contract in place) as a better indicator, offering a fuller picture by accounting for future work. She notes that committed utilisation “is higher now at 92% than 20 years ago, when it was 85%”.
The declining rig count and inclining productivity is explained by efficiency improvements. This includes the drilling of longer laterals in the most productive plays, such as the Permian.
The American Petroleum Institute reports that, in 2025, the average length of laterals in the Midland Basin in the Permian region were 58% longer than in 2015, while Rystad notes that over 50% of wells completed in 2025 have spanned more than 10,500ft (two miles) laterally, with the longest reaching 21,276 ft (four miles). Improvements in drilling technology have driven these figures, including horizontal drilling and electric hydraulic fracturing.
Electric hydraulic fracking uses electric motors to drive hydraulic pumps, rather than diesel engines. The EIA spokesperson explains that this “leads to higher efficiency at the expense of some upfront cost”.
Electric pumps improve efficiency because they lose less energy to heat and friction and convert a higher percentage of input energy into useful work; they also offer the advantage of reduced emissions and noise.
Considering the adoption of new technologies, the EIA also highlights AI as a transformative technology, offering increased efficiency by “sifting through seismic, historical and geologic data to better identify high-productivity patches”.
A GlobalData report noted alternative uses of AI in upstream operations: “The oil and gas industry can adopt AI to perform costly and risk-heavy explorations for potential upstream wells or suitable storage locations for captured carbon, using virtual renders of potential reservoirs.”
Understanding productivity potential enables increased efficiency, which in turn reduces how long rigs are needed for.
“Improved drilling efficiencies have greatly reduced the amount of time needed to drill a well, resulting in fewer rigs needed. Enhanced oil recovery techniques mean more hydrocarbons are being extracted than in the past,” summarises Edralin.
The US oil rig picture: will it change?
Westwood expects to see the number of oil rigs under committed utilisation in the US increase across 2026, as exploration and production companies continue to contract rigs for drilling projects in 2027. However, the number of rigs under contract in 2026 will be weak.
Edralin explains: “Most of the work we are expecting to take place in the US Gulf in 2026 has already been contracted or will soon be finalised, and not all of the region’s marketed rigs will find work. Some units may be moved to other regions for work, and some may choose to wait out the lull in the expectation that those rigs will secure work in the US Gulf for 2027.”
Her estimations tally with the EIA’s forecasts, which state that in the case of crude oil, US production will average 13.4mbbl/d in 2025 and “a bit less in 2026, based on more recent market conditions”. There will be an increase in 2027, however, when crude oil production is expected to reach 14mbbl/d.
The forecasted 2026 production decline mirrors the present decline in the number of wells drilled across the lower 48 states of the US. In the third quarter of 2025 (Q3 2025), the EIA reported 2,655 new wells drilled, of which 1,278 were in the Permian region. This represents a decline from the same quarter in 2024, when 2,743 were drilled, 1,380 of them in the Permian.
By the end of Q3 2024, the Permian region had seen a total of 4,179 new wells drilled, compared to 4,045 in Q3 2025. Despite the decline in drilling, the Permian region is forecast to buck the 2026 productivity decline to see increased crude oil production: further proof of the waning relationship between rigs and production, and the impact of drilling productivity improvements.
Within the overarching downward drilling trend, industry shifts are visible. The percentage share of horizontal wells has been increasing, reaching 21% in 2023, up from 8% a decade earlier in 2013.
This is not the only shift; Edralin points out that “in the US Gulf, we have seen drilling activity migrate from shallow water to primarily deep water. Within the deep-water fleet, we have also seen a transition from mostly semi-subs to nearly all drill-ships.”
She adds: “The average contracted rig count in the US Gulf 20 years ago was 112: 85 jack-ups, 22 semi-subs and five drill-ships. This year, the average contracted rig count is 22, broken down as two jack-ups, one semi-sub and 19 drill-ships.”
