The U.S. energy industry is showing renewed signs of strength after supply disruptions tied to the 2026 Iran war, with oil companies increasing drilling activity across the country and Texas leading the recovery.
According to the latest data from Baker Hughes, the number of active oil rigs in the United States reached 445 during the week ending July 2, the highest level recorded since May 2025. The increase marks a steady rebound that began in late April following months of sluggish activity during the winter and early spring.
Texas remains at the center of the nation's oil production, accounting for nearly half of all active drilling rigs. After falling to a low of 180 operating rigs in early February, the state climbed back to 219 active rigs last week—the highest total since July 2025.
The resurgence comes as global energy markets continue adjusting to supply shortages created by the conflict involving Iran and ongoing negotiations surrounding the Strait of Hormuz, a critical shipping route through which a significant share of the world's oil and liquefied natural gas exports travel.
While drilling activity has accelerated, increased production will take time to materialize. New rigs must be drilled, completed and brought online before they contribute meaningful volumes of oil to the market.
Even so, industry sentiment has improved considerably over the past several months.
A recent survey from the Federal Reserve Bank of Dallas found that oil production, oilfield employment demand and capital spending all increased between April and June across its district, which includes the Permian Basin and the Gulf of Mexico. Nearly 44 percent of energy executives surveyed reported a more optimistic business outlook during the quarter, while only 15 percent said conditions had worsened.
Employment data also points to a modest recovery. Dallas Fed figures show Texas oil and gas extraction payrolls rose to roughly 65,000 workers in March, up from approximately 64,000 in January. While employment remains below the August 2024 peak of about 68,000 workers, the increase marked the strongest monthly gain since late 2024.
Despite improving drilling activity, production has yet to fully recover.
Preliminary data from the Texas Railroad Commission shows Texas operators produced approximately 122.7 million barrels of oil in April, down about 14 percent compared to the 143.5 million barrels produced during the same month in 2025. Year-over-year production also lagged in January, February and March.
Consumers, however, have seen some relief at the pump.
After Texas gasoline prices climbed above $4 per gallon in May during heightened global supply concerns, prices have steadily declined. The U.S. Energy Information Administration reported the statewide average price had fallen to $3.36 per gallon this week.
Looking ahead, Texas' refining capacity could also expand. Construction is underway in Brownsville on what is expected to become the first new oil refinery built in the United States in roughly 50 years, adding another major investment to the state's growing energy infrastructure.
