EIA expects oil costs to be underneath strain from oversupply in 2025, 2026

By Shariq Khan

NEW YORK (Reuters) -Oil costs shall be underneath strain over the following two years as world manufacturing development outpaces demand, the U.S. Power Data Administration stated on Tuesday in its Brief-Time period Power Outlook report.

Many analysts anticipate an oversupplied oil market this yr, after demand development slowed sharply in 2024 within the largest energy-consuming nations: the U.S. and China.

The EIA stated it expects Brent crude oil costs to fall 8% to common $74 a barrel in 2025, then fall additional to $66 a barrel in 2026.

The EIA barely raised its estimate for file U.S. oil manufacturing this yr, to 13.55 million barrels per day, from its prior estimate of 13.52 million bpd.

U.S. crude costs are anticipated to common $70 per barrel in 2025 and fall to $62 per barrel subsequent yr, stated the EIA, the primary time it’s issuing an outlook for 2026.

The share of U.S. provide coming from the Permian Basin of Texas and New Mexico, the world’s largest shale oil-producing area, is anticipated to proceed to develop and account for greater than half of the entire nation’s output in 2026, the report stated.

Globally, oil and liquid gasoline manufacturing is now anticipated to common 104.4 million bpd in 2025, up from the prior forecast of 104.2 million bpd, the EIA stated.

The EIA cited a call by the Group of Petroleum Exporting Nations and allies to ease provide curtailments and expectations that non-OPEC producers will enhance output.

World demand, in the meantime, is anticipated to common 104.1 million bpd, down from the prior estimate of 104.3 million bpd, and nonetheless decrease than pre-pandemic developments, the EIA stated.