The U.S. Energy Information Administration (EIA) highlights that increasing output from OPEC+ and uncertainty surrounding tariff policies have led to heightened volatility in oil prices. Recently, oil prices reached a four-year low following OPEC+ members agreeing to significantly raise oil output for June.
Reports suggest that the group is considering further acceleration in their output increases. Despite this, the EIA anticipates that OPEC+ will maintain production levels below their current target.
They project an increase in supply from the organization by approximately 200,000 barrels per day this year, bringing the total to 42.9 million bpd, which is a slight uptick from earlier forecasts. Furthermore, U.S. President Donald Trump’s unpredictable tariff strategies have negatively impacted oil prices recently.
Economists warn these tariffs could hinder global trade and potentially lead to a recession. According to the EIA’s short-term energy outlook, the impact of any new tariffs on global economic activity and oil demand remains uncertain, which could further influence oil prices.
As a consequence of declining oil prices, domestic producers in the U.S. have begun reducing their spending, indicating that the nation’s oil output might have reached its peak at current price levels. The EIA now projects U.S. oil production to set a smaller record this year at 13.42 million bpd, slightly down from their previous forecast of 13.51 million bpd.
For the upcoming year, production is expected to rise to 13.49 million bpd, which is also lower than an earlier estimate. West Texas Intermediate crude oil prices are projected to average $61.81 a barrel this year, reflecting a reduction of more than $2 per barrel from prior assessments.
Additionally, the EIA has revised its 2025 Brent crude price forecast downward to $65.85 a barrel from $67.87.