Key facts
- US oil production is expected to grow modestly next year due to market uncertainty.
- The Iran conflict has created a global oil shortage and driven up spot prices for US oil.
- Approximately 136 million barrels of oil are currently trapped in the Gulf due to the conflict.
- US refineries are operating at high utilization rates, while Asian refineries are at lower capacity.
- Canada has become the largest supplier of US oil imports, accounting for over 60% in 2025.
- Oil's share of global energy consumption has decreased significantly since 1973.
U.S. oil production is poised for only modest growth in the upcoming year, as companies exhibit caution regarding increased spending in a market characterized by uncertainty. The ongoing conflict involving Iran has significantly impacted global oil dynamics, shifting the market from a state of oversupply to a notable shortage. This situation has resulted in elevated premiums for U.S. oil, particularly West Texas Intermediate (WTI) Midland, which is commanding substantial premiums for delivery to North Asia and Europe.
An estimated 136 million barrels of crude oil and petroleum products are currently held in the Gulf region due to the conflict. While the cessation of hostilities could eventually allow for the resumption of shipping, the restoration of oil production to pre-conflict levels is anticipated to be a gradual process, potentially taking several months. Initial estimates suggest a return of two to three million barrels per day in the first month, followed by an additional two to 3.5 million barrels per day over the subsequent quarter. There is also a possibility that one to two million barrels per day of capacity may be permanently lost or restricted, contributing to a tighter market and increased price volatility.
In the United States, domestic refineries are operating at near-full capacity, with Gulf Coast facilities exceeding 95% utilization. This has led to record exports of U.S. refined products. In contrast, Asian refineries are operating at significantly lower utilization rates, largely due to their historical reliance on Persian Gulf oil. The U.S. has become the world's largest oil producer, largely due to advancements in fracking technology, and has increasingly turned to North American sources for its imports. Canada, in particular, has become the dominant supplier, accounting for a record 60.88% of U.S. oil imports in 2025. Consequently, oil imports from Middle Eastern nations have fallen to their lowest share since the 1980s, representing less than 10% of total U.S. imports in 2025.