Petroleum products

U.S. crude oil production
We forecast continued increasing U.S. crude oil production in 2025 and 2026. In 2026, production growth begins to slow as drilling and completion activity is reduced in response to sustained lower crude oil prices and producers prioritizing value per barrel over production volume.

We estimate U.S. crude oil production set a record of 13.2 million barrels per day (b/d) in 2024. We expect U.S. producers will continue to produce more crude oil in both 2025 and 2026, but we expect production growth to slow notably in 2026. We forecast annual average crude oil production in the United States will reach 13.5 million b/d in 2025, up 3% from 2024, before rising by just 1% to reach 13.6 million b/d in 2026.

We forecast the Permian region will be the largest source of U.S. production growth in both years and the only major source of production growth in 2026. Permian production will rise nearly 300,000 b/d in both years, averaging 6.6 million b/d in 2025 and 6.9 million b/d in 2026. Our forecast for continued increase in production in the Permian region is supported by improving well productivity and added pipeline takeaway capacity. We expect newly drilled wells in the Permian region will become more productive as producers continue to implement new technology and better drilling practices. We also expect production from mature wells to remain relatively stable, with only mild reductions in output.

Regions outside of the Permian see a slowdown in production growth. Production outside of the Permian region in the Lower 48 states will remain flat in 2025, and we forecast it will decrease by about 170,000 b/d (-4%) in 2026. The declines in other regions are because of reduced drilling and completion activity, partly in response to lower crude oil prices. In addition, regional well productivity, takeaway capacity, and access to international markets are more limited in other regions than in the Permian.

We forecast that crude oil production in the Gulf of Mexico will increase to 1.8 million b/d in 2025 and remain near that volume in 2026. Compared with onshore tight oil production, Gulf of Mexico production is characterized by projects with longer lead times, and it is driven by a few large-scale projects that are less sensitive to short-term variations in crude oil prices.

Retail gasoline prices
U.S. retail gasoline prices in our forecast are mostly lower in 2025 and 2026 than they were in 2024, when the retail price averaged about $3.30 per gallon (gal). We forecast average U.S. gasoline prices in 2025 will decrease by more than 10 cents/gal on an annual basis, down about 3% from 2024. In 2026, we forecast a further decrease of almost 20 cents/gal, or an additional 6%.

Retail gasoline prices decreased in both 2023 and 2024, after increasing substantially in 2022. On both a nominal and percentage basis, we estimate the price decreases in 2025 and 2026 will be smaller than the decrease between 2022 and 2023 (when prices fell 11% year on year). Price decreases since 2022 have reflected both decreasing crude oil prices and narrowing refinery margins. In 2025 and 2026, we estimate refinery margins will remain relatively flat, but gasoline prices will continue to decrease with the price of crude oil.

In 2025, expect lower refinery capacity will put some upward pressure on gasoline prices, although we expect this pressure to be counteracted by lower crude oil prices. The lower inventories reflect a small increase in gasoline consumption in 2025, as well as reduced refinery production.

We estimate that retail gasoline prices will decrease in most U.S. regions during 2025. The exception is in the Rocky Mountains, where expect gasoline prices will be mostly unchanged from 2024. In 2026, we expect retail gasoline prices in the West Coast to increase, though prices continue to decrease on the East Coast, on the Gulf Coast, and in the Midwest and Rocky Mountains. Higher West Coast prices reflect decreased regional gasoline production following the expected closure of Phillips 66’s Los Angeles refinery at the end of 2025. Higher Rocky Mountain prices reflect expectations for rising demand and ongoing regional capacity constraints.