Released January 16, 2025 | SUGAR LAND
en
Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Global oil production is expected to outpace demand this year, with much of the support coming from North America, though wildcards exist in the form of conflict in the Middle East and Eastern Europe, reports indicate.
It's a trifecta week for energy market reports, with the U.S. Energy Information Administration (EIA), the International Energy Agency (IEA) and the Organization of the Petroleum Exporting Countries (OPEC) all publishing their monthly reports for January.
For the EIA, the statistical arm of the Energy Department, oil production outweighs demand this year, pushing crude oil prices lower through 2026. EIA estimates West Texas Intermediate (WTI), the U.S. benchmark for the price of oil, could be trading in the mid-$60 per barrel range next year. WTI averaged $76.60 in 2024.
"We expect downward oil price pressures over much of the next two years, as we expect that global oil production will grow more than global oil demand," EIA analysts wrote in their Short-Term Energy Outlook report for January.
The EIA expects much of the non-OPEC growth to come from North America. Total crude oil production in the United States last year averaged 13.2 million barrels per day (BBL/d), and it's expected to reach 13.5 million BBL/d this year.
Much of the support comes from the Permian Basin, which accounts for about 50% of total U.S. crude oil production. OPEC economists added that additional growth outside North America will come from Brazil and Norway.
Combined with production from North America, OPEC expects to see production from non-member states increase by 1.1 million BBL/d this year. The global economy, meanwhile, is expected to expand annually by 3.1% this year, with the bulk of the expansion coming from an economy in India expected to grow by 6.5% this year.
The U.S. economy, the world's largest, is set to expand by 2.4%, an upward revision from OPEC's December outlook. China, the second-largest economy in the world, expands by 4.7%, unchanged from previous estimates.
Crude oil prices were largely range-bound last year amid lackluster demand. China's economy, meanwhile, has performed worse than expected since the end of the COVID-19 pandemic.
The start of 2025, however, saw a surge in crude oil prices, compounded by a recent decision from outgoing U.S. President Joe Biden to tighten the sanctions noose on Russia. In its monthly oil market report, the IEA warned that supply disruptions from Russia and Iran could offset production gains from non-OPEC members this year.
Reports out Wednesday made little mention of the possible agenda from U.S. President-elect Donald Trump, who begins his second, non-consecutive term in office on Monday. After brokering a revised trade deal with his North American neighbors during his first term in office, Trump has pledged to impose a 25% tariff on Mexico and Canada.
Both countries account for more than half of the total crude oil delivered to the United States. Many U.S. refiners are tooled to process the heavier type of crude oil found in Canada, the top exporter to the United States, though Trump has said that would be included in his tariff plan.
OPEC economists said they expect modest recovery this year, but Trump would be another wildcard.
"It remains to be seen, in particular, what role potential tariffs and other policy measures by the incoming U.S. administration will play," they wrote Wednesday.
Meanwhile, there's a chance for a lasting ceasefire in the Middle East following more than a year of conflict between Israel and its regional adversaries, which would erase any geopolitical risk premium in crude oil prices. A vacuum may emerge, however, in Syria as the world's competing superpowers jockey for position after the fall of the Assad regime in Damascus.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
It's a trifecta week for energy market reports, with the U.S. Energy Information Administration (EIA), the International Energy Agency (IEA) and the Organization of the Petroleum Exporting Countries (OPEC) all publishing their monthly reports for January.
For the EIA, the statistical arm of the Energy Department, oil production outweighs demand this year, pushing crude oil prices lower through 2026. EIA estimates West Texas Intermediate (WTI), the U.S. benchmark for the price of oil, could be trading in the mid-$60 per barrel range next year. WTI averaged $76.60 in 2024.
"We expect downward oil price pressures over much of the next two years, as we expect that global oil production will grow more than global oil demand," EIA analysts wrote in their Short-Term Energy Outlook report for January.
The EIA expects much of the non-OPEC growth to come from North America. Total crude oil production in the United States last year averaged 13.2 million barrels per day (BBL/d), and it's expected to reach 13.5 million BBL/d this year.
Much of the support comes from the Permian Basin, which accounts for about 50% of total U.S. crude oil production. OPEC economists added that additional growth outside North America will come from Brazil and Norway.
Combined with production from North America, OPEC expects to see production from non-member states increase by 1.1 million BBL/d this year. The global economy, meanwhile, is expected to expand annually by 3.1% this year, with the bulk of the expansion coming from an economy in India expected to grow by 6.5% this year.
The U.S. economy, the world's largest, is set to expand by 2.4%, an upward revision from OPEC's December outlook. China, the second-largest economy in the world, expands by 4.7%, unchanged from previous estimates.
Crude oil prices were largely range-bound last year amid lackluster demand. China's economy, meanwhile, has performed worse than expected since the end of the COVID-19 pandemic.
The start of 2025, however, saw a surge in crude oil prices, compounded by a recent decision from outgoing U.S. President Joe Biden to tighten the sanctions noose on Russia. In its monthly oil market report, the IEA warned that supply disruptions from Russia and Iran could offset production gains from non-OPEC members this year.
Reports out Wednesday made little mention of the possible agenda from U.S. President-elect Donald Trump, who begins his second, non-consecutive term in office on Monday. After brokering a revised trade deal with his North American neighbors during his first term in office, Trump has pledged to impose a 25% tariff on Mexico and Canada.
Both countries account for more than half of the total crude oil delivered to the United States. Many U.S. refiners are tooled to process the heavier type of crude oil found in Canada, the top exporter to the United States, though Trump has said that would be included in his tariff plan.
OPEC economists said they expect modest recovery this year, but Trump would be another wildcard.
"It remains to be seen, in particular, what role potential tariffs and other policy measures by the incoming U.S. administration will play," they wrote Wednesday.
Meanwhile, there's a chance for a lasting ceasefire in the Middle East following more than a year of conflict between Israel and its regional adversaries, which would erase any geopolitical risk premium in crude oil prices. A vacuum may emerge, however, in Syria as the world's competing superpowers jockey for position after the fall of the Assad regime in Damascus.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
