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Informist, Wednesday, Jun. 11, 2025

 

MUMBAI – The US Energy Information Administration has lowered its forecast for global oil demand growth in 2025 to 800,000 barrels per day from its previous projection of 1 million barrels per day, the agency said in its Short-Term Energy Outlook for June. It has forecast the global oil demand growth for 2026 at 1.1 million barrels per day driven primarily by demand from non-Organization for Economic Co-operation and Development countries.

 

"Total non-OECD consumption grows by 900,000 barrels per day in 2025 and 1.0 million barrel per day in 2026, while OECD consumption is largely unchanged over the forecast," it said.

 

Crude oil prices have plunged for the fourth consecutive month in May driven by expectations of rising global inventories that have resulted from slowing global oil demand growth and the accelerated unwinding of Organization of the Petroleum Exporting Countries and allies voluntary production cuts, which began in April, the agency said. 

 

On May 31, OPEC and allies members agreed to a third month of planned production increases in July, with the potential for revisions pending market conditions. These factors contribute to expectation that global oil production will exceed consumption over the forecast period, causing global oil inventories to build up and putting downward pressure on oil prices. "We expect Brent crude oil prices will average $66 per barrel this year and $59 per barrel next year," it said.

 

The planned increases to OPEC and allies production combined with supply growth outside of the group continue to drive strong global liquid fuels production growth. Global liquid fuels production increases by 1.6 million barrels per day in 2025, 200,000 barrels per day higher than in last month's short-term energy outlook, before increasing by 800,000 barrels per day in 2026.

 

Countries outside of OPEC and allies will drive global liquid fuels production growth this year, increasing production by 1.1 million barrels per day. However, OPEC and allies will drive growth next year in the forecast as non-OPEC and allies growth, according to the agency's forecast, slows to 200,000 barrels per day, with growth from Brazil, Guyana, and Canada being partly offset by a slight drop in US production.

 

India will increase its consumption by 200,000 barrels per day in 2025 and 300,000 barrels per day in 2026, compared with an increase of 200,000 in 2024, driven by rising demand for transportation fuels. Demand for liquid fuels in China will grow by 200,000 barrels per day in both 2025 and 2026, up from an increase of 100,000 barrels in 2024, the agency said.

 

Global oil inventories increased over the first five months of 2025 and will continue to grow significantly over the forecast period. EIA expects global oil inventory builds will average 800,000 barrels per day in 2025, 400,000 barrels per day higher than in last month's forecast. "For the second half of the year, we expect that slowing global oil production growth--led by relatively flat U.S. crude oil production--and rising oil consumption growth mean builds will moderate to 600,000 barrels per day next year, with markets moving towards balance," EIA said.

 

Global inventory builds in 2025 are higher in this month's outlook than last due to a combination of lower oil demand in the OECD in 2025 and increased supply growth from both OPEC and allies countries and from countries outside of the group.

 

Although, the agency does not forecast any major supply disruption and oil supply risks, wildfires around Canada's major oil sands facilities in Alberta, elevated tensions in the ongoing Russia-Ukraine conflict, as well a potential force majeure on oil exports in Libya have the potential to disrupt supply. Another source of uncertainty is the willingness and ability of OPEC+ members to coordinate future production targets in the face of falling oil prices and increasing oil supply from sources outside of OPEC+.

 

In addition, uncertainty around the status of ongoing trade negotiations between the US and its trading partners could greatly affect oil prices. The status of sanctions on Russia and Iran remains uncertain, as does future development around Venezuelan oil assets, which have the potential to influence trade flows and affect oil prices, according to EIA.

 

US crude oil production in 2025 is seen at 13.42 million barrels per day, unchanged from last month's projection. In 2026, production by the world's biggest oil producer is seen at 13.37 million barrels per day, against the previous forecast of 13.49 million barrels per day, the report said.

 

At 1415 IST, the price of Brent Crude on the Intercontinental Exchange was $66.97 per barrel and the price of WTI crude on NYMEX was $65.25 per barrel.  End

 

US$1 = INR 85.55

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

 

Reported by Taniva Singha Roy

Edited by Akul Nishant Akhoury

 

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