According to a recent analysis by S&P Global, U.S. crude oil production is projected to decline in 2026, marking the first year-on-year decrease in nearly a decade, excluding the impacts of the COVID-19 pandemic in 2020. This shift in expectations is attributed to slowing global oil demand amidst uncertainties regarding U.S. trade policies and an anticipated surplus in supply.
The S&P Global Commodity Insights team indicates that global oil demand growth is expected to average 750,000 barrels per day in 2025, reflecting a significant downward revision of 500,000 barrels per day from previous forecasts. The strong demand growth observed in early 2023, which was approximately 1.75 million barrels per day compared to the previous year, is not expected to continue at the same pace. For the latter half of the year, demand growth is projected to decline to an average of 420,000 barrels per day.
As a result of these changes, U.S. crude oil production is anticipated to reduce from an average of 13.46 million barrels per day in 2025 to 13.33 million barrels per day by 2026. This outlook is contingent on a price range in the mid to low $60s per barrel for Dated Brent and low $60s or high $50s for West Texas Intermediate (WTI) for the remainder of this year.
S&P Global analysts caution that further tariff complications and increased OPEC+ production cuts pose additional risks to market stability. Jim Burkhard, Vice President and Global Head of Crude Oil Research at S&P Global, noted that while the potential magnitude of an economic and oil demand downturn remains uncertain, initial signs of decline are visible. He remarked that a drop in U.S. oil production could serve as a critical inflection point for the market, potentially paving the way for a price recovery, though the extent of recovery will depend on the economic trajectory post-2025.
Alongside these projections, the U.S. Energy Information Administration (EIA) has also recently adjusted its forecasts, projecting that U.S. crude oil production will average 13.42 million barrels per day in 2025 and slightly increase to 13.49 million barrels per day in 2026, despite a record output of 13.21 million barrels per day in 2024.
The current landscape suggests that while challenges exist, there is still a potential for recovery in the oil sector if economic conditions stabilize and demand picks up thereafter. However, monitoring ongoing trade negotiations and market responses will be crucial in determining the resilience of U.S. oil production moving forward.