US oil output growth is expected to slow in 2025 with a sharper decline in 2026 as global supply rises and demand weakens, S&P Global reports
The United States is expected to face a remarkable decline in oil production growth as early as 2025. According to S&P Global Commodity Insights, the U.S. is expected to be hit more than other producers by rising global supply and slowing demand. The report forecasts an even greater reduction in output by 2026 and this may have far-reaching implications for energy markets and pricing.
S&P predicts that the worldwide production of crude oil and condensate will rise by 2.2 million barrels per day in the latter half of 2025. On the contrary, demand is only projected to grow by 390,000 barrels a day. That mismatch has the potential to create a supply mismatch which may cause producers especially in the U.S., to either reduce production or postpone investment plans.
Weak Demand and Price Forecast Revisions
The projected 770,000 barrels per day oil demand growth in 2025 would be the lowest since 2001 barring economic crises. This deceleration rate indicates that the recent increase in global consumption is levelling off. According to Jim Burkhard, Vice President at S&P Global, seasonal demand could provide a short-term boost, but it does not eliminate long-term market weaknesses.
Due to this imbalance, S&P updated its oil price estimates. Brent crude may decline to 50-60 dollars per barrel, whereas West Texas Intermediate (WTI) can fall to the high 40s. These forecasts present a more bearish view caused by a mishmash of increasing global output and unenthusiastic demand development. The fact that OPEC+ decided to ease further production cuts only adds to the risks of excess supply.
Market Sentiment and Global Competition
The U.S. will be the largest non-OPEC producer to experience a sharp decline in production. Analysts note that other states such as Brazil, Guyana, and Canada are still increasing production, only not at a rate that would compensate for a possible decline in the U.S. supply. This transition can alter the view of American supremacy in the international oil market.
Ian Stewart, the Associate Director at S&P Global, underlined that a slower production in the U.S. might impact general market psychology. The U.S. has been instrumental in moderating international supply, and a prolonged slump in production is likely to make traders and suppliers reconsider supply and investment plans going forward. The response in the upcoming years will depend on future OPEC+ decisions and demand trend developments.
