EIA projects lower oil prices in 2025

Oil prices are expected to move lower this year amid significant market uncertainties, the US Energy Information Administration (EIA) said in a new report.

PHOTO: Oil barrels. Getty Images

The EIA forecasts Brent crude to decline from an average of $81/bbl in 2024 to $74/bbl this year, and to $66/bbl in 2026. Strong growth in global oil production will outpace relatively slower oil demand growth to bolster global oil inventories, the EIA said.

The decline in prices will be “mainly because of growing production in countries outside OPEC+ and demand growth that is less than the pre-pandemic average,” the energy agency said.

The energy agency further expects that OPEC+ oil producers’ group will continue to restrain production in 2025 and 2026 to prevent prices from falling further, amid lower oil consumption. Meanwhile, production growth outside of OPEC+ - primarily led by the US, Canada, Guyana and Brazil - is projected to remain strong in 2025, before waning in 2026.

US crude oil production is expected to reach an all-time high in 2025, averaging 13.5 million b/d, and increasing slightly to 13.6 million b/d in 2026, the EIA said. However, it pointed out that changes in economic growth rates and other policies could “significantly alter” the trajectory of oil prices compared to its forecast.

“Uncertainty in our price forecast implies uncertainty in our outlook for U.S. crude oil production,” the US agency said.

Besides, geopolitical uncertainties in the Middle East “still have the potential to affect supply from several OPEC+ members,” the EIA said. Despite not having any direct impact on the region’s oil supply, the conflict has boosted Brent’s price in recent months.

“Significant uncertainty remains in all aspects of oil supply and demand, which will influence oil prices given any differences compared with our forecast,” the EIA said.

By Aparupa Mazumder

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