Crude oil prices stabilized on Wednesday after experiencing a dip earlier this week in response to the Energy Information Administration’s (EIA) latest Short-Term Energy Outlook.
The EIA’s report forecasted weaker oil prices for both 2024 and 2025, driven by expectations that OPEC will scale back its production cuts while non-OPEC oil producers continue to increase their output at accelerated rates. This led to a drop in both Brent crude and West Texas Intermediate (WTI) prices on Tuesday, though prices later rebounded. As of Wednesday, Brent crude was trading at $80.17 per barrel, while WTI stood at $77.88 per barrel.
The EIA’s outlook projected a global oil production increase of 1.8 million barrels per day (bpd) this year, with an additional 1.5 million bpd in 2026. In the U.S., oil production is expected to see a more modest rise, growing from 13.2 million bpd in 2024 to 13.5 million bpd, with a slower increase to 13.6 million bpd by 2026. The Permian Basin is expected to remain the driving force behind U.S. oil production growth, contributing more than half of the national total next year. However, the EIA noted that production in other regions is set to decline.
On the consumption side, the EIA forecasted a growth of 1.3 million bpd this year, which is 200,000 bpd lower than the anticipated production increase. Growth is expected to slow further in 2025 to just 1.1 million bpd, with significant demand from Asia, particularly India.
Despite these projections, the EIA acknowledged that its forecast was compiled before the U.S. government imposed new sanctions on the Russian oil industry. These sanctions are anticipated to disrupt Russian oil exports, potentially tightening the global oil supply and boosting prices by reducing any surplus on the market.