Record oil production in West Texas helps stabilize U.S. supply amid Iran war

Texas produced nearly half of all U.S. oil last year despite having drilled fewer new oil wells in 2025, a trend that analysts and industry groups said is possible due to the state’s geological makeup, a network of pipelines and transportation, and the ability to work on multiple production sites in less time.

And that West Texas oil has helped keep U.S. supply steady as oil supply across the world has been squeezed during the Iran war, experts said.

American oil companies produced 13.6 million barrels of oil daily last year, once again breaking their own record, according to a report by the Energy Information Administration. Almost half — 6.6 million barrels a day — came from the Permian Basin, the vast stretch of oil-rich deposits spanning tens of thousands of square miles between western Texas and southeastern New Mexico.

Oil companies accomplished the record with a fraction of available drilling rigs, which the industry historically relied on to search for, find and lift fossil fuels from the ground. The EIA, in its report, said fewer rigs could lead to a 2% drop in production in 2027, marking the first time oil could dip since 2021.

And in light of the U.S. war on Iran, domestic oil production — particularly in West Texas — has taken on a new meaning.

The war pushed gas prices sky high as the global supply of oil has been slashed during the conflict. Texas oil leaders said the situation could have been worse had it not been for their work.

“Without the millions of barrels produced a day in the Permian Basin there’s no question we’d be in much more volatile times,” said Ben Shepperd, president of Permian Basin Petroleum Association, the largest regional trade group in the country. “The strong production coming out of the Permian Basin, however, helps provide a stable source of energy for the United States and our allies, which can reduce volatility when conflicts arise in other parts of the world.”

The report’s findings aren’t a first for Texas oil companies. For at least the past six years, industry groups have announced record production levels. Industry and political leaders alike have celebrated the production as a win for the state’s economy, saying royalties and taxes from the industry translate to billions of dollars for the state’s coffers and school districts.

Texas Oil and Gas Association President Todd Staples said that 10 years ago, oil companies drilled 9.2 million barrels of oil using 1,543 rigs. In 2025, oil companies produced more than 13 million barrels with only 582 rigs.

The agile infrastructure — and geology beneath — affords operators in the Permian to adapt quickly when the market is under duress.

Different layers of rock underground allow operators to extract more fossil fuels at varying depths. Operators can also transit between wells within hours rather than days, drill multiple wells from a single site, or drill in multiple directions and at multiple depths.

“While we are not immune from what’s happening around the world, we occupy a position of strength far beyond most other nations,” Staples said. “The Permian’s … consistently demonstrated ability to adapt quickly to market shifts make it one of the most competitive oil-producing areas in the world.”

Some experts cautioned that declining rig counts, if sustained, could hinder production, if not stop it altogether.

“Depressed rig counts raise legitimate concerns about future production sustainability,” said Ed Longanecker, president of the Texas Independent Producers and Royalty Owners Association. “If the trend continues without offset, operators risk slower inventory replacement and a potential plateau or gradual decline in output over the medium term, particularly if new drilling fails to keep pace with natural decline rates in existing wells.”

The conflict in the Middle East has, Longanecker and other experts argued, given oil companies short-term economic windfalls. Gas prices have shot up with the closure of the Strait of Hormuz, which cut 20% of the world’s oil.

On Tuesday, oil prices soared to at least $114 a barrel prior to the ceasefire.

Experts suggested it could be worse. A mix of experts and groups representing oil companies’ interests in Texas said the U.S. has been insulated from more devastating economic consequences of the war. The amount of oil West Texas produces can determine the severity of the impact to the U.S. economy, they said.

“West Texas serves as a partial counterweight to disruptions in the Middle East,” said Stephen Sagriff, director of intelligence at Enverus, an energy analytics company. “It is also a source of geopolitical leverage for the U.S., a region whose own investment decisions are shaped by the volatility.”

In addition to stabilizing oil demand in the U.S., the Permian lessens its dependence on oil from other nations, said Don Murchison, director of global strategy at RINA North America, an engineering consulting firm. The West Texas oil patch can also produce more oil than other states at a lower cost, Hutchinson said.

“We often see a significant uptick in production in West Texas when there is conflict in other parts of the world,” he said, while adding that when the industry booms, new challenges arise surrounding finding equipment, materials and employees.

Disclosure: Ben Shepperd, Permian Basin Petroleum Association and Texas Oil & Gas Association have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune’s journalism. Find a complete list of them here.

This story was originally published by The Texas Tribune and distributed through a partnership with The Associated Press.