Oil prices are expected to face downward pressure in the next two years as global production growth surpasses demand, according to the U.S. Energy Information Administration (EIA) in its Short-Term Energy Outlook report released on Tuesday.
Many experts predict an oversupply in the oil market this year after demand growth slowed sharply in 2024 in major energy-consuming countries, including the U.S. and China.
The EIA forecasts that Brent crude oil prices will drop by 8%, averaging $74 per barrel in 2025, and will decline further to $66 per barrel in 2026.
The EIA slightly raised its U.S. oil production forecast for 2025 to 13.55 million barrels per day (bpd), up from its earlier estimate of 13.52 million bpd.
For U.S. crude prices, the EIA expects an average of $70 per barrel in 2025, with prices falling to $62 per barrel in 2026, marking the first time the agency has issued a 2026 outlook.
The report also predicts that the Permian Basin in Texas and New Mexico, the world’s largest shale oil-producing region, will continue to play a key role. It is expected to account for more than half of U.S. oil output by 2026.
On the global front, oil and liquid fuel production is now projected to average 104.4 million bpd in 2025, slightly up from the previous forecast of 104.2 million bpd. The EIA cited OPEC and its allies easing supply cuts, along with rising output from non-OPEC producers.
Global oil demand is expected to average 104.1 million bpd, a slight reduction from the earlier estimate of 104.3 million bpd, and still below pre-pandemic levels.
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