Strength, then oversupply? Parsing the latest EIA oil forecast

The Energy Information Administration’s (EIA) new short-term energy forecast confirms strong demand for 2025 but notes that the balance of supply and demand will shift toward oversupply in the back half of the year and 2026.

“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,” the EIA wrote.” We forecast that the Brent crude oil price will average $74 per barrel (b) in 2025, 8% less than in 2024, and then continue to fall another 11% to $66/b in 2026.”

Since the pandemic, the global oil market has navigated a complex landscape shaped by various economic, geopolitical and production-related factors. In 2025, the outlook remains fairly neutral, with projections indicating downward pressure amid relative stability in oil prices despite potential challenges on the horizon.

One of the primary demand-side factors influencing the oil market has been China’s sustained economic growth. As the world’s second-largest economy, China’s thirst for oil plays a pivotal role in shaping global oil consumption patterns. The ongoing expansion of China’s industrial sector and its transportation infrastructure have significantly bolstered global oil demand, contributing to the stabilization of oil prices. In 2025, China’s economic trajectory is expected to continue exerting a positive influence on oil demand, pushing global consumption to an estimated 104 million barrels per day (mb/d).

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