In 1967, following the Six-Day War, oil-producing nations in the Middle East limited their oil exports to countries supporting Israel in that war. That forced the U.S. and other embargoed countries into action to ensure they had a steady supply of crude, which included increased drilling for domestic oil. Those ramped-up drilling efforts helped drive U.S. oil production to a peak of 9.6 million barrels per day (BPD) in 1970.

However, it was all downhill from there. Output in the country would steadily decline until it hit a low of roughly 5 million BPD right around the time of the financial crisis, which was one of the fuels causing crude to spike to a pinnacle of $147.27 per barrel in July 2008. The sky-high pricing, when combined with some good old American ingenuity, ultimately led to the breakthrough of combining hydraulic fracturing with horizontal drilling, enabling oil companies in the country to unlock a treasure trove of oil and gas trapped in shale formations. In fact, the nation has unleashed such a torrent of crude that America is on pace to produce more than 10 million barrels per day this year, which could make it the global leader in 2018.

An oil pump with an American flag in the background.

Image source: Getty Images.

The coming flood

According to a forecast from the U.S. Energy Information Administration (EIA), oil production in the U.S. should average 10.3 million BPD this year, an increase of 1 million BPD from just last year. The International Energy Administration (IEA), likewise, sees U.S. oil output rising to about 10 million BPD this year. That forecast makes it "possible that very soon US crude production could overtake that of Saudi Arabia and also rival Russia's," according to the IEA, assuming both countries hold to their current agreement to keep a lid on output in support of higher oil prices.

Much of this oil is already on its way, according to the EIA, which expects U.S. drillers to increase production from the top shale plays by 1.5% this month and another 1.7% in February. That's a big-time uptick considering that output from these regions has been mainly flat for the past several months due to lower oil prices last summer. However, with crude roaring higher since then, and recently in the $60s, producers in the country have the cash to drill more wells.

A pipeline and an oil pump at sunset.

Image source: Getty Images.

Jaw-dropping growth projections with more on the way

While many oil producers in the country haven't unveiled their official 2018 plans, several put out their preliminary expectations last fall when crude was in the low $50s. Despite that lower price, most expected healthy growth this year. For example, Continental Resources (CLR), which was one of the earlier developers of the Bakken shale, anticipated that its production would increase 15% to 20% this year as long as crude stayed between $50 to $55 a barrel. That's an acceleration from the 10% to 12% growth rate Continental expected in 2017. In the meantime, WPX Energy (WPX), which also operates in the Bakken as well as the Permian Basin, planned to grow its oil production 40% to 45% this year. That forecast matches WPX Energy's torrid pace from last year.

That said, with crude now in the $60s, it's more likely that oil production in the U.S. will head even higher than initially expected. That's certainly what the IEA sees, which is why it ratcheted up its U.S. oil growth forecast from an increase of 870,000 BPD to 1.1 million BPD for 2018. That's because shale leaders like EOG Resources (EOG -1.44%) have made it clear that they can grow faster as oil prices rise. In the case of EOG Resources, it can increase its U.S. oil output at a 15% compound annual growth rate through 2020 at $50 oil and could accelerate that up to 25% compounded annually at $60 oil. While EOG Resources hasn't revealed its guidance for 2018, the company was on pace to boost output 20% last year, and given its ultra-low costs, could grow even faster this year given current pricing. Others appear likely to accelerate since most plan to reinvest all their oil profits on drilling more wells, which will likely cause oil output here to grow further in 2019, with the EIA estimating that it could average 10.8 million BPD.

On an oil-fueled high, for now

With a coalition of oil-producing nations led by Saudi Arabia and Russia planning to keep a lid on their oil output this year to prop up prices, it has opened the door for the U.S. to take over the top spot. That surge in production, when combined with currently higher oil prices, could send producer profits -- and their stock prices -- soaring this year. That said, if the U.S. unleashes too much production, it could cause Russia and Saudi Arabia to abandon their agreement and start another market share war that might topple crude prices. So, while the U.S. oil industry appears poised to make a big-time comeback this year, it might be a short-lived boost if producers get greedy and grow too fast.