U.S. Independents Begin Increasing Oil Production in Response to New Market Conditions

Some U.S. independent producers have begun increasing their capital programs to ramp up shale oil production as the price of oil has risen dramatically since the war in Iran broke out in late February. Now, oil prices are above $100 per barrel.

Here’s a look at four important takeaways from the current situation.

Independents are Quick to Respond to Market Signals

Several large independents have announced plans to increase crude production in the Lower 48, including Continental Resources, Diamondback Energy, and EOG Resources.

Continental Resources, the world’s largest private oil producer, was the first to state its intent to increase production. It did not specify the level of its planned production increase.

In Q4 2025, Continental produced 475,000 barrels of oil equivalent per day from its fields in North Dakota, Oklahoma, Wyoming, and Texas; however, because of the low-oil-price environment, the company announced in early 2026 that it would suspend production in North Dakota for the first time in 30 years.

Continental Resources’ initial 2026 capital plan was to reduce its capital program by 20 percent to $2.5 billion. With the latest plan to increase production, it will likely raise its capital for the remainder of the year.

Diamondback, one of the largest U.S. independent producers, issued a special letter to its shareholders in May, announcing plans to bring “incremental barrels to the market immediately.”

Diamondback will increase its production by 3 percent from its previously planned 505,000 to 520,000 barrels of oil equivalent per day in 2026. Diamondback said that it will run five completion crews for the rest of 2026 and add “two to three” new drilling rigs, “to preserve a healthy backlog of projects to maintain operational flexibility.” It will also “begin to work down (its) drilled uncompleted well (DUC) balance.”

Diamondback is the most-focused shale producer in the United States, with 100-percent acreage in the Permian Basin between Texas and New Mexico. Its share price increased by 30 percent year-to-date in 2026 as of mid-May.

“We believe there is a legitimate supply-demand imbalance, and the associated price signal is the catalyst to begin to grow production,” said Diamondback CEO Kaes Van’t Hof.

EOG, the United States’ third largest independent producer, announced it would increase oil production by some 8,000 barrels per day to reach 1.3 million barrels of oil equivalent per day in 2026. EOG said that it could increase its U.S. production by “mid-single digits.”

EOG explained that it does not need to increase its $6.5-billion capital budget. Instead, it will shift spending from gas assets toward oil assets.

Shares for the $70-billion-market-cap company have increased by roughly 25 percent year-to-date from January to May.

In addition to assets in six U.S. onshore basins (the Delaware, Eagle Ford, and Dorado in Texas; the Williston and Power River in the Rocky Mountains; and the Utica in Appalachia), EOG is taking its shale expertise international. It is trying to develop shale resources in the United Arab Emirates and Bahrain, in addition to its legacy position in Trinidad and Tobago.

Supermajors are Sticking with their Capital Programs … For Now

The U.S. majors, ExxonMobil, Chevron, and ConocoPhillips, have opted as of mid-May not to change their previously announced investment programs, despite the significantly higher oil price.

During each of their respective Q1 results calls, these majors said that they are maintaining pre-war spending plans, despite calls from the Trump administration to increase drilling and help lower oil prices. The majors claim that their activity levels in U.S. shale are already very high and refineries are running close to full capacity. Also, oil executives don’t know how long higher oil prices will remain after the conflict in Iran ends and the Strait of Hormuz reopens for normal crude shipments.

“You wouldn’t expect us to be changing our plans significantly on the back of eight weeks of disruption,” said Eimear Bonner, Chevron’s chief financial officer.

ConocoPhillips lowered its production forecast for the 2026 from 2.33 to 2.36 million barrels of oil equivalent per day to 2.30 to 2.33 million barrels of oil equivalent per day. This is partly because ConocoPhillips’ production in Qatar is being disrupted by the war in Iran.

The EIA Has Raised Estimates for Near-Term U.S. Crude Production and Oil Price Highs

In its latest Short-Term Energy Outlook, the Energy Information Administration estimates average daily U.S. crude production will be 13.6 million barrels per day in 2026, the same as in 2025. For 2027, the EIA projects U.S. crude production will increase to 14.1 million barrels per day. In the same report, the EIA says the Brent price will average $95 per barrel in 2026, as a result of the conflict in Iran. This is up from $69 per barrel in 2025. For 2027, it estimates Brent will average $79 per barrel. It states WTI will average $86 per barrel in 2026, up from $65 per barrel in 2025. For 2027, WTI will average $74 per barrel.

The EIA also estimates that shut-in OPEC production in April totaled 10.5 million barrels per day, due to the closure of the Strait of Hormuz. It believes the Strait of Hormuz will effectively be closed for May and resume shipping in June. Shipping across the Strait will not return to the pre-war level until later in 2026, and it will take some time for some OPEC countries to return to pre-war production levels, leading to large global oil inventory draws, especially in May and June.

The EIA estimates that total shut-in OPEC production will average 6.4 million barrels per day in Q3 2026 and 1.7 million barrels per day in Q4, 2026, excluding production from the United Arab Emirates, which decided to exit OPEC effective 1 May 2026.

Some short-term oil demand destruction is expected, especially in Southeastern countries heavily affected by the conflict in Iran. The EIA estimates that global oil demand will only grow by 0.2 million barrels per day to 104.1 million barrels per day in 2026, down from its earlier estimate of 0.6 million barrels per day. Oil demand growth will rebound to 1.5 million barrels per day to 105.6 million barrels per day in 2027.

The United Arab Emirates’ OPEC Exit Introduces A New Dynamic

The United Arab Emirates made a major announcement that it would exit OPEC (see related article by David Brown in this issue). It has been the third-largest oil producer within the cartel (3.4 million barrels per day), following Saudi Arabia and Iraq. The UAE has also been the most vocal country against Iran’s efforts to block shipping through the Strait of Hormuz, calling it an act of “economic terrorism.”

That the UAE has taken a stance to side closer to the United States is a continuation of its geopolitical choices. In 2020, during President Trump’s first term, the UAE and Bahrain signed the Abraham Accords with Israel to normalize diplomatic relations.

The UAE has had tensions with OPEC leader Saudi Arabia as both countries were supporting opposing factions in wars in Yemen and South Sudan. By exiting OPEC+, the UAE is also signaling its displeasure with Russia, a strong supporter of Iran and a main leader of OPEC+.

The UAE will likely increase its crude production now that it is an independent producer with 1.4 million barrels of spare capacity. It remains to be seen how much it will decide to increase its crude production in the future. In the medium to long term, how the UAE will be treated by its neighbors and world powers, including the United States, China, the European Union, and Russia, will be key to watch.

For the time being, leading U.S. independent oil producers have decided to play the “swing producers’ role,” following the market signals by raising their output and responding to the Trump administration’s calls to increase domestic oil production and help curb the rise of domestic gasoline prices.