Page 9 - Policy Economic Report_Jan 25

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Figure 3: Global economic growth & PMI

Source- S&P Global

2. EIA forecasts lower oil price in 2025 amid significant market uncertainties

? According to EIA, benchmark Brent crude oil prices are expected to fall from an average of $81
per barrel in 2024 to $74/bbl in 2025 and $66/bbl 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.

? It is forecasted that prices will fall to an average of $66/bbl 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.

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

? 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.

? Further EIA forecasts 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 forecast that these countries will increase their production by an additional 1.0 million
b/d in 2025 and 0.9 million b/d in 2026.

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