The U.S. Energy Information Administration (EIA) recently announced that U.S. crude oil production is expected to decline next year for the first time since the disruptions caused by the COVID-19 pandemic in 2020 and 2021. This downturn is primarily attributed to falling commodity prices, which are leading to a slowdown in drilling activities. The forecast stands in contrast to former President Donald Trump’s promise to boost domestic energy production. Concerns are growing regarding the potential end of the nearly two-decade-long U.S. shale revolution.
Oil prices have dropped significantly, largely due to the OPEC+ group’s decision to ease supply restrictions, coupled with uncertainties stemming from erratic trade policies. The EIA projects that crude oil output in the U.S., the globe’s largest oil producer, will decrease from approximately 13.42 million barrels per day (bpd) this year to around 13.37 million bpd in 2026. This is a shift from earlier predictions that indicated potential growth to 13.49 million bpd next year. Rory Johnston, founder of the Commodity Context newsletter, stated that a decrease in U.S. production might stabilize oil prices, but a true recovery in the market will hinge more on global demand rather than U.S. supply dynamics.
Additionally, the EIA has revised its global oil consumption forecast downward by about 200,000 bpd, now predicting a total of 103.5 million bpd this year, mainly due to weaker consumption in developed nations. For this year, Brent crude oil prices are estimated to average $65.97 per barrel, with a decrease to $59.24 per barrel expected next year. U.S. West Texas Intermediate crude oil is projected to average $62.33 this year and decline to $55.58 the next year.