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Informist, Wednesday, Feb. 12, 2025

 

MUMBAI – The US Energy Information Administration sees global oil production rising by 1.9 million barrels per day in 2025, up from 600,000 barrels per day in 2024. Global oil production in 2026 is forecast to rise by 1.6 million barrels per day and the incrase can be attributed to a combination of suply growth from countries outside of the Organisation of Petroleum Exporting Countries and allies and the relaxation of OPEC+ production cuts, the agency said in its monthly Short-Term Energy Outlook. "We expect growth of 100,000 barrels per day in 2025 from OPEC+ producers, compared with a decrease of 1.3 million barrels per day in 2024, before the group increases production by 600,000 barrels per day in 2026," it said.

 

Eight members of OPEC and its allies--Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman--are scheduled to unwind the voluntary production cuts, amounting to 2.2 million barrels per day, from April. 

 

"We do not anticipate that the sanctions on Russia's oil and shipping sectors announced on January 10 will significantly affect our oil production forecast," the agency said.

 

EIA expects the subsequent ramp up in production and continued growth in supply outside of OPEC and its allies will lead to an average inventory build-up of 100,000 barrels per day over the remainder of 2025.

 

In terms of prices, the spot price of Brent crude oil averaged $79 per barrel in January, $5 per barrel higher than in December. Crude oil prices increased immediately, following the Jan. 10 announcement of a new round of sanctions on Russia's oil shipments, the agency said. Prices gradually fell over the course of the month as concerns around weak global oil demand growth and oversupply regained focus from market participants. 

 

On Feb. 1, US President Donald Trump signed an executive order announcing the imposition of tariffs on imports from Canada, Mexico, and China. Subsequently, the implementation of tariffs for imports from Mexico and Canada were delayed by 30 days, so the effects of those two policies are not reflected in this outlook.

 

"Although the future imposition of tariffs could affect oil trade routes, we do not presently anticipate the tariffs put forward in the February 1 executive order would significantly affect global oil supply. Still, the possibility of future tariffs and the new sanctions on Russia are sources of uncertainty for oil prices going forward," it said.

 

However, global oil inventories will begin increasing once OPEC+ begins raising production, starting April. These production increases combined with expectations of relatively weak global oil demand growth will lead to a 900,000 barrels per day increase in global oil inventories in the second half of 2025 and a 1.0 million barrel per day increase in 2026.

 

Currently the falling global oil inventories and increased uncertainty will keep crude oil prices at an average of $77 per barrel through the first quarter of 2025, before increasing inventories again begin putting downward pressure on prices through the remainder of the forecast. As a result, Brent crude oil price is likely to fall to $72 per barrel in December, averaging $74 per barrel in 2025 before falling to an average of $66 per barrel in 2026.

 

The impact of recently announced sanctions and tariffs on Russia and China have heightened oil price volatility in the short term, while markets and trade patterns adjust. In addition, the eventual resolution of the delayed tariffs on oil volumes from Canada and Mexico as well as the potential for sanctions on oil volumes from Iran remains, which have the potential to influence oil prices, the enery bureau said.

 

Global consumption of liquid fuels is forecast to rise by 1.4 million barrels per day in 2025 and 1 million barrels per day in 2026, driven primarily by demand from non-Organisation for Economic Co-operation and Development Asia. "We expect India will increase its consumption of liquid fuels by 300,000 barrels per day in both 2025 and 2026, compared with an increase of 200,000 barrels per day in 2024, driven by rising demand for transportation fuels.

 

The US agency forecast China's liquid fuels consumption to grow by 200,000 barrels per day in 2025 and 2026, up from growth of less than 100,000 barrels per day in 2024, as China's economic stimulus efforts increase petroleum consumption.

 

The EIA expects net crude oil imports to the US to fall to 1.9 million barrels per day in 2025 from 2.5 million barrels per day this year. US crude oil production in 2025 is seen marginally up at 13.59 million barrels per day, compared with 13.52 million barrels per day projected last month.

 

At 1552 IST, the price of Brent Crude on the Intercontinental Exchange was $72.51 per barrel and the price of West Texas Intermediate crude on NYMEX was $72.46 per barrel.  End

 

US$1 = INR 86.89

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Taniva Singha Roy

Edited by Deepshikha Bhardwaj

 

 

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