(Bloomberg) — US oil production will likely decline next year, but the scale of the dropoff will be substantially reduced by an old source of new supplies: the Gulf of Mexico. Most Read from Bloomberg Producers in the body of water — which President Donald Trump renamed the Gulf of America — will bring on 300,000 barrels of new daily output this year and a further 250,000 barrels in 2026 due to projects many years in the making, according to forecaster Wood Mackenzie Ltd. These will increase production in the region to more than 2 million barrels a day, about 40% higher than in 2020.

The growth comes against a backdrop of slowing US shale production due to weaker oil prices, as onshore producers cut rigs and costs to counter rising supplies from OPEC and its allies. Overall US production will decline 0.4% to 13.37 million barrels a day next year, the first drop since 2021, according to the Energy Information Administration’s Short-Term Energy Outlook released Tuesday. The Gulf’s rising importance represents a turnaround from the past two decades, when the region — tarnished by the Deepwater Horizon oil spill, spiraling costs and pandemic shutdowns — took a backseat to the shale boom that has made the US the world’s largest oil producer.

But now tumbling crude prices are hurting shale drillers while major, longer-term Gulf projects are starting to come online. “Most people are focused on onshore, when the real growth this year will come from offshore,” Miles Sasser, a senior research analyst at Wood Mackenzie, said in an interview. “The projects in the Gulf of America are ramping up nicely, and that should come as a surprise to many.” Trump has promised to unleash US oil and gas production, and his administration is reworking policies to help boost flows, including from the Gulf.

He has also created a National Energy Dominance Council to help expand production. But his global trade war and the OPEC+ supply increases that he has encouraged have hammered crude prices, spurring the pullback by shale drillers. Chevron Corp. will grow Gulf production 50% from last year, to 300,000 barrels a day by 2026.

Shell Plc has Sparta, a 90,000 barrel-a-day project coming online in 2028, while BP Plc has a series of projects through the end of the decade that will increase production capacity by about 20% to more than 400,000 barrels a day. These are all coming at a time when frackers are warning US shale production may have peaked.