Wellbore instability is one of the most serious problems that can occur during drilling, mainly during drilling oil or gas wells through rocks that contain a higher proportion of clay, such as shales. To prevent wellbore instability, oil companies apply different approaches to strengthen wellbore walls, and use different shale swelling inhibitors. The aim of this research was to apply a green approach and the concept of the circular economy in mud design, and to determine whether mandarin peel powder, which is a waste material, can be used as an inhibitor of shale swelling. For that purpose, pellets consisting of bentonite and quartz in a 50:50 ratio were prepared using a compactor, and bentonite-based drilling mud (BM) with and without mandarin peel powder in concentrations of 0.5, 1, 1.5 and 2% by volume of water. The swelling of quartz–bentonite pellets after 2 and 24 h in each drilling-mud sample was determined at room temperature and 90 °C using a linear swell meter. On the basis of laboratory research, we concluded that increasing the concentration of mandarin peel powder reduces pellet swelling. By adding mandarin peel powder particles between 0.1 and 0.16 mm to the base mud at a concentration of 2% by volume of water, the following was achieved: 44% reduction in API filtration, 61.54% reduction in PPT filtration, 45% reduction in pellet swelling after 24 h at room temperature, and 48.6% reduction of pellet swelling after 24 h at 90 °C.