US: what is the outlook for oil and gas over next five years? 

As the world's foremost oil and gas producer, what is expected to happen to the United States' production of fossil fuels over the next 5 years?

The next five years will be pivotal for U.S. oil and natural gas production as market forces, regulatory policies, and technological advancements shape the industry's trajectory.

Based on recent forecasts, U.S. crude oil production is expected to continue its growth, albeit at a slower pace, while natural gas demand is projected to outpace supply due to increasing exports and infrastructure constraints. 

Are we demanding more natural gas?

U.S. natural gas consumption typically peaks during the winter months, with January often marking the highest demand due to heating needs. Despite increasing variability in winter temperatures, the forecast for January 2025 suggests consumption will average 119 billion cubic feet per day (Bcf/d), similar to 2024 levels.

However, extreme cold spells can still cause demand spikes, influencing both inventory levels and price trends.

Over the next two years, domestic demand is expected to grow, driven primarily by residential and commercial sectors due to colder winter projections. However, electricity generation from natural gas is expected to decline slightly as renewable energy sources and coal regain some market share.

Constraints on natural gas supply and exports

Natural gas production is expected to increase moderately in 2025 and 2026, with total supply rising by 1.4 Bcf/d in 2025.

However, demand is forecast to rise by 3.2 Bcf/d, with much of the increase coming from liquefied natural gas (LNG) exports. The commissioning of new LNG export facilities—Plaquemines LNG and Corpus Christi LNG Stage 3—has already bolstered U.S. export capacity, and the upcoming Golden Pass LNG project in 2026 will further increase outbound shipments.

Pipeline exports to Mexico and Canada are also expected to grow, contributing to tightening supply conditions in the domestic market. With inventories declining below the five-year average, natural gas prices are expected to rise.

The Henry Hub spot price is projected to average $3.10/MMBtu in 2025 and climb to $4.00/MMBtu in 2026. Price fluctuations will largely depend on the pace of LNG infrastructure expansion and winter weather severity.

Trends in crude production

The U.S. crude oil sector is poised for continued, albeit slower, growth. After setting a record 13.2 million barrels per day (b/d) in 2024, production is forecast to rise to 13.5 million b/d in 2025 and 13.6 million b/d in 2026.

Growth is expected to be driven primarily by the Permian Basin, which remains the most productive oil-producing region in the country.

Advances in drilling technology and improved well productivity will sustain output gains in the Permian, where production is projected to increase by nearly 300,000 b/d annually.

Outside the Permian, however, production in other Lower 48 states is expected to remain flat in 2025 and decline by approximately 170,000 b/d (-4%) in 2026.

Reduced drilling activity, along with lower well productivity and infrastructure constraints, will limit growth in regions outside Texas and New Mexico. Meanwhile, offshore production in the Gulf of Mexico is forecast to reach 1.8 million b/d in 2025 and remain steady through 2026, supported by long-term project investments.

What about oil?

Despite sustained output growth, global oil market conditions and economic trends will exert downward pressure on crude prices. U.S. retail gasoline prices are expected to trend lower, averaging about $3.20 per gallon in 2025, down 3% from 2024 levels.

In 2026, gasoline prices could drop further as refinery margins stabilize and crude prices soften. However, regional price variations will persist, with the West Coast experiencing higher prices due to refinery closures and infrastructure limitations.

Brent crude oil prices, which averaged between $74 and $90 per barrel in 2024, are expected to remain within this range through 2025. OPEC+ supply adjustments, geopolitical developments, and global economic trends will continue to influence price stability.

Some analysts predict a mild price increase in 2025, with Brent averaging around $89 per barrel before stabilizing near $91 per barrel in 2026.

Challenges and uncertainties

Several factors could impact the U.S. oil and gas outlook, including geopolitical risks, regulatory and policy shifts, OPEC+ decisions, and the energy transition. Ongoing conflicts and supply disruptions in key global markets could drive price volatility.

Potential changes under a new U.S. administration in 2025 may alter permitting processes, LNG export policies, and drilling regulations. The gradual unwinding of OPEC+ production cuts in late 2024 and 2025 could add supply pressure and moderate price gains.

Increased investment in low-carbon energy sources and efficiency improvements may reduce fossil fuel dependence, impacting long-term demand.

The U.S. oil and gas industry is entering a phase of moderated growth, shaped by shifting demand dynamics, rising exports, and evolving market conditions.

While natural gas supply constraints and expanding LNG infrastructure will drive price increases, crude oil production will continue to rise, with the Permian Basin leading the way.

However, broader macroeconomic and geopolitical factors will influence price stability and investment decisions in the coming years. As the industry navigates these complexities, maintaining capital discipline and investing in infrastructure resilience will be key to sustaining long-term growth and competitiveness in global energy markets.