Shale and other "tight" oil formations made the United States the world's largest crude oil producer. In 2025 US output averaged a record 13.6 million barrels per day, and nearly half of it came from a single region, the Permian Basin. This guide explains how shale production works, the main basins and why they matter for the WTI price.
How Shale Oil Is Produced
Tight oil is held in low-permeability rock that will not flow to an ordinary vertical well. Producers drill horizontally along the rock layer for two miles or more and then use hydraulic fracturing to open cracks that let oil flow. Shale wells produce strongly at first and then decline quickly — typically losing well over half of their initial rate within the first year — so producers must keep drilling to hold output flat. That treadmill is why US production responds to prices within months, not years.
US Crude Production by State (2025)
| State / area | Thousand b/d | Share |
|---|---|---|
| Texas | 5,761 | 42% |
| New Mexico | 2,205 | 16% |
| Federal Gulf of Mexico (offshore) | 1,942 | 14% |
| North Dakota | 1,171 | 9% |
| Colorado | 475 | 3% |
| Alaska | 422 | 3% |
| Oklahoma | 404 | 3% |
| California | 288 | 2% |
| Wyoming | 289 | 2% |
| United States total | 13,662 | 100% |
Source: EIA, crude oil production by state, annual 2025. Shares rounded.
The Permian Basin
Spanning West Texas and southeastern New Mexico, the Permian produced about 6.6 million b/d in 2025 — 48% of US output — and grew by about 280,000 b/d during the year, according to the EIA. It has two main sub-basins: the Midland Basin to the east and the Delaware Basin to the west, which straddles the Texas–New Mexico line and accounts for New Mexico's rapid growth. Its key formations include the Wolfcamp, Spraberry and Bone Spring. Permian crude is priced locally as WTI Midland and flows by pipeline mostly to Corpus Christi and Houston for refining and export, with some going north to Cushing. Large pipelines built in 2019–2020, such as Cactus II, EPIC and Gray Oak, ended the bottlenecks that had pushed Midland prices far below Cushing in 2018.
The basin has also been the center of industry consolidation: ExxonMobil bought Pioneer Natural Resources (2024), Diamondback combined with Endeavor (2024) and Occidental acquired CrownRock (2024).
The Bakken (North Dakota and Montana)
The Bakken and Three Forks formations in the Williston Basin made North Dakota the second-largest onshore producing state for much of the 2010s; the state produced about 1.17 million b/d in 2025. Because it is far from the coast, Bakken crude moves by pipeline (including the Dakota Access Pipeline, in service since 2017) and rail, and it usually trades at a discount to Cushing.
The Eagle Ford (South Texas)
The Eagle Ford in South Texas boomed from about 2010 and is close to Gulf Coast refineries and the export terminals at Corpus Christi. Its output is lower than at its 2015 peak, as investment shifted to the Permian, but it remains a significant source of light oil and condensate.
Other Basins
- DJ Basin (Colorado): about 475,000 b/d statewide in 2025.
- Anadarko Basin (SCOOP/STACK, Oklahoma): Oklahoma produced about 404,000 b/d.
- Powder River Basin (Wyoming): a smaller but growing tight-oil play.
- Gulf of Mexico (offshore): not shale, but about 1.9 million b/d of mostly medium sour crude in 2025.
Why the Basins Matter for WTI
- Supply response: shale growth was the main reason the US went from importing most of its oil to being a net exporter of crude and products. Its fast response caps prices over the medium term — but only if prices exceed drilling breakevens. In the Dallas Fed's March 2025 Energy Survey, executives put the average WTI price needed to profitably drill a new well at about $65; in the first-quarter 2026 survey it was about $66.
- Quality: shale crude is light and sweet. That matches the WTI delivery specification but not every refinery, which is why the US both exports light crude and imports heavier grades.
- Pipelines and spreads: when basin output outruns pipelines, local prices fall and the WTI-Brent spread widens; new pipelines narrow it.
See how OPEC+ decisions interact with shale and how producer shares relate to the oil price in oil stocks vs oil prices.
Sources
- EIA — Crude oil production by state (annual)
- EIA — U.S. crude oil production rose in 2025, setting new record
- Dallas Fed — Energy Survey, March 2025
- EIA — Tight oil and hydraulic fracturing explained
Disclaimer: This guide is for general educational purposes only and is not investment advice.