The North Amer­i­can on­shore mar­ket is the most dy­nam­ic drilling rig mar­ket in the world, with rig rates (es­pe­cial­ly in the USA) quick­ly re­spond­ing to chang­ing mar­ket con­di­tions. De­spite Pres­i­dent Trump’s mantra of “drill ba­by drill,” the rig rate has ac­tu­al­ly fall­en in 2025, dri­ven by mar­ket fun­da­men­tals rather than rhetoric.

Bak­er Hugh­es col­lates the glob­al rig counts for ma­jor oil and gas mar­kets around the world, in­clud­ing Africa, Asia-Pa­cif­ic, Eu­rope, Latin Amer­i­ca, Mid­dle East and North Amer­i­ca.

Ac­cord­ing to the com­pa­ny, rig counts are an im­por­tant busi­ness barom­e­ter for the drilling in­dus­try and its sup­pli­ers. When drilling rigs are ac­tive, they con­sume prod­ucts and ser­vices pro­duced by the oil ser­vice in­dus­try. The ac­tive rig count acts as a lead­ing in­di­ca­tor of de­mand.

The USA is the largest pro­duc­er of crude oil in the world. Pro­duc­tion in the US grad­u­al­ly de­clined dur­ing the 1990s and ear­ly 2000s but in­creased steeply again af­ter post-2010 and is now at an all-time high. De­spite this, the coun­try has seen year on year de­cline in ac­tive drilling rigs since 2022, putting fu­ture pro­duc­tion at risk.

There are sev­er­al rea­sons for the fluc­tu­a­tions in rig ac­tiv­i­ty which are of­ten in­ter­con­nect­ed to the eco­nom­ics of oil and gas pro­duc­tion. For ex­am­ple, com­mod­i­ty prices, tech­nol­o­gy and ef­fi­cien­cy and geopol­i­tics.

US oil pro­duc­ers surged in pro­duc­tion af­ter adop­tion of frack­ing tech­nol­o­gy and the abil­i­ty to de­vel­op shale oil re­sources. How­ev­er new tech­niques and tech­nol­o­gy, like longer lat­er­al wells, au­toma­tion and more pow­er­ful equip­ment, have dri­ven pro­duc­tiv­i­ty gains across the in­dus­try that have al­lowed oil com­pa­nies to pump more with few­er rigs and less cap­i­tal.

In 2020, the US on­shore rig count dropped rapid­ly in re­sponse pri­mar­i­ly to the COVID pan­dem­ic. While the dis­ease it­self did cause dis­rup­tions to drilling op­er­a­tions, the ma­jor is­sue was that stay-at-home mea­sures meant that there was re­duced de­mand for crude oil and gas. The mas­sive drop in de­mand led to a huge over­sup­ply of oil, with stor­age ca­pac­i­ty rapid­ly fill­ing up, par­tic­u­lar­ly in the USA. This pushed oil prices to his­toric lows, with the price of crude oil even turn­ing neg­a­tive for the first time in his­to­ry in April 2020. The US is more sen­si­tive to this type of phe­nom­e­non due to the large trad­ing hub and stor­age fa­cil­i­ties.

The drilling ac­tiv­i­ty re­cov­ered in the USA but con­tin­ues to fall again af­ter 2022, pri­mar­i­ly due to ef­fi­cien­cy gains in drilling and low oil prices.

Ac­cord­ing to some in­dus­try ex­perts, the num­ber of rigs work­ing in US shale fields has al­most fall­en so low, and is pro­ject­ed to keep falling, that those im­prove­ments will not be enough to keep on­shore US pro­duc­tion ris­ing, or even steady in some basins.