Oil, falling over the next 2 years - Global production growth will exceed demand
Oil prices will be under pressure over the next two years as global production growth outpaces demand, the U.S. Energy Information Administration said in its Short-Term Outlook report.
Many analysts expect an oversupplied oil market this year, as demand growth slowed significantly in 2024 in the largest energy-consuming countries, such as the US and China.
According to the report, Brent crude oil prices will fall by 8% to an average of $74 per barrel in 2025 and then decline further to $66 per barrel in 2026.
The administration slightly raised its estimate for record U.S. oil production this year to 13.55 million barrels per day, from a previous estimate of 13.52 million barrels per day. U.S. crude oil prices are expected to average $70 a barrel in 2025 and fall to $62 a barrel next year.
The share of U.S. supply coming from Texas and New Mexico, the world's largest shale oil production region, will continue to grow and account for more than half of the country's entire production by 2026, the report said.
Globally, oil and liquid fuel production is now expected to average 104.4 million barrels per day in 2025, up from the previous forecast of 104.2 million barrels per day.
The administration cited a decision by the Organization of the Petroleum Exporting Countries and allies to ease supply cuts, as well as expectations that non-OPEC producers will increase output.
Meanwhile, global demand is expected to average 104.1 million barrels per day, down from a previous estimate of 104.3 million barrels per day, still lower than pre-pandemic trends, the report notes.
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