The US Energy Information Administration (EIA) forecasts benchmark Brent crude oil prices will fall from an average of $81 per barrel (b) in 2024 to $74/b in 2025 and $66/b in 2026, as strong global growth in production of petroleum and other liquids and slower demand growth put downward pressure on prices and help offset heightened geopolitical risks and voluntary production restraint from OPEC+ members.

This forecast was completed before the United States issued additional sanctions targeting Russia’s oil sector on 10 January, which have the potential to reduce Russia’s oil exports to the global market.

EIA forecasts prices will fall to an average of $66/b in 2026 mainly because of growing production in countries outside OPEC+ and demand growth that is less than the pre-pandemic average. These factors reduce forecast oil prices because production outpaces consumption, increasing global oil inventories. EIA expects OPEC+ members to continue to restrain production in 2025 and 2026 to prevent prices from falling further.

Ultimately, EIA expects lower prices will reduce drilling activity and investment in US production of crude oil and other liquids, leading to a small increase in production in 2026.

Significant uncertainty remains in all aspects of oil supply and demand, which will influence oil prices given any differences compared with the forecast, EIA noted. OPEC+ members might change their policies as they face the prospect of ceding further market share to countries outside of the group. US crude oil and other liquids production has been highly sensitive to changes in crude oil prices, and a small difference in prices with the forecast would alter the growth or decline of US production. Lastly, EIA forecasts relatively slow growth in global oil consumption, but changes in economic growth rates and other systemic changes could significantly alter the trajectory compared with the forecast.

In both 2023 and 2024, oil production outside of OPEC+ was strong enough to largely offset the increase in global oil consumption despite reduced production from OPEC+. Members of OPEC+ reduced production by an estimated 1.3 million barrels per day (b/d) in 2024, while production by countries outside the group increased by 1.8 million b/d. EIA anticipates that production growth outside of OPEC+ will remain strong in 2025, before waning in 2026, while OPEC+ production cuts are gradually unwound.

Growth in global oil production over the last two years has been led primarily by countries in North and South America, especially the United States, Canada, Guyana, and Brazil. Those four countries alone increased their total liquids production by a combined 1.1 million b/d in 2024. EIA expects they will increase their production by an additional 1.0 million b/d in 2025 and 0.9 million b/d in 2026. However, it is uncertain whether those countries can sustain high levels of growth over the next two years given the potential for constraints around takeaway capacity or delays in project startups.

EIA expects a slowdown in liquids production growth from the United States in 2026. In the forecast, US crude oil production flattens in 2026 because operators will reduce the number of active drilling rigs as crude oil prices fall, allowing natural declines in existing wells to overtake production from new wells next year. Production in the Permian region—the largest source of world crude oil production growth in the past 15 years—still grows, but at a slower rate than previous years and will be offset by declines in all other shale basins, conventional onshore production, and offshore production.

EIA forecasts US crude oil production will reach an all-time high in 2025, averaging 13.5 million b/d, increasing slightly to 13.6 million b/d in 2026. Uncertainty in the price forecast implies uncertainty in the outlook for US crude oil production.

Falling US production growth in 2026 adds uncertainty for global supply growth. Although EIA expects OPEC+ supply to grow as the latest round of voluntary production cuts are scheduled to unwind by 2026, these OPEC+ production increases have already been delayed several times and are their own source of uncertainty.

Last year was the first year since the COVID-19 pandemic in which population growth, economic growth, and oil consumption weren’t affected by pandemic-related reductions or recovery. World liquid fuels consumption grew less than the decade prior to the pandemic (2010–19) and will continue to grow more slowly in 2025 and 2026. Led by India, Asian countries (excluding China and Japan) and emerging markets in the Middle East and Africa will grow world liquid fuels consumption by 1.3 million b/d in 2025 and 1.1 million b/d in 2026, less than the 2010–19 average of 1.5 million b/d.

EIA forecasts that liquid fuels consumption in China will grow considerably more slowly than prior to the pandemic. China’s government has signaled its willingness to introduce stimulative monetary and fiscal policies following slower economic growth in 2024. The forecast assumes China’s GDP will grow 4.4% in 2025 and 4.1% in 2026, but economic stimulus or other measures could significantly alter China’s economic growth, which would also affect oil consumption and introduces significant uncertainty to the consumption forecast. In addition, the country is selling more electric vehicles and alternative fueled trucks. Depending on the rate of sales growth and overall market penetration of these vehicles, the consumption forecast for China could differ significantly, EIA said.

Growth in US consumption of liquid fuels is also highly uncertain. The forecast assumes US GDP growth of 2% in both years, with industrial production growing 1% in 2025 and 2% in 2026, which is faster than pre-pandemic industrial production growth. These factors increase distillate consumption, as stronger industrial activity increases demand for trucking, the largest consumer of on-road diesel.