By Shariq Khan
NEW YORK (Reuters) -Oil prices will be under pressure over the next two years as global output growth outpaces demand, the U.S. Energy Information Administration said in its Short-Term Energy Outlook report on Tuesday.
Many analysts expect an oversupply of oil in the oil market this year, after demand growth slowed sharply in 2024 in the largest energy-consuming countries: the US and China.
The EIA expects the price of Brent crude oil to fall 8% to an average of $74 per barrel in 2025, before falling further to $66 per barrel in 2026.
The EIA slightly raised its estimate for record US oil production this year, to 13.55 million barrels per day, from the previous estimate of 13.52 million barrels per day.
U.S. crude oil prices are expected to average $70 a barrel in 2025 and fall to $62 a barrel next year, the EIA said, the first time it has issued 2026 forecasts.
The share of U.S. supply coming from the Permian Basin of Texas and New Mexico, the world’s largest shale oil-producing region, is expected to continue growing and account for more than half of the country’s total production by 2026, according to the report.
Global oil and liquid fuel production is now expected to average 104.4 million barrels per day in 2025, up from the previous forecast of 104.2 million barrels per day, the EIA said.
The EIA cited a decision by the Organization of the Petroleum Exporting Countries and allies to ease supply constraints and expectations that non-OPEC producers will increase production.
Global demand, meanwhile, is expected to average 104.1 million barrels per day, down from the previous estimate of 104.3 million barrels per day, and still lower than pre-pandemic trends, the EIA said.
(Reporting by Shariq Khan and Scott DiSavino in New York, additional reporting by Laila Kearney; Editing by David Gregorio)
