By Anthony Harrup


The recent move higher in oil prices is likely to be temporary as higher production causes benchmark crude prices to fall from their 2024 levels this year and next, the U.S. Energy Information Administration said.

"Following some initial upward price pressure in early 2025, we expect that crude-oil prices will generally decline from mid-2025 through the end of 2026 as growth in global oil production outpaces growth in oil demand," the EIA said Tuesday in its Short Term Energy Outlook.

The EIA sees international benchmark Brent averaging about $74 a barrel this year, down from $81 a barrel in 2024. For 2026, it expects Brent to average $66 a barrel. West Texas Intermediate, the U.S. benchmark, is forecast to fall to around $70 a barrel this year from $77 in 2024, and decline further to $62 a barrel in 2026.

Prices will be supported in the first quarter as the extension of output cuts by the Organization of the Petroleum Exporting Countries and its allies contributes to a 500,000 barrel-a-day decline in global inventories, before stocks start to accumulate from mid-2025 through 2026, according to the EIA. On average, inventories are expected to rise by 300,000 barrels a day in 2025 and 700,000 barrels a day in 2026.

The agency foresees global oil production rising by 1.8 million barrels a day this year and a further 1.5 million barrels a day in 2026. U.S. production is forecast at 13.5 million barrels a day this year, with growth then slowing to reach 13.6 million barrels a day in 2026.

"Although we forecast OPEC+ will increase production, we expect the group will produce less crude oil than stated in its most recent production target in an effort to avoid significant inventory builds," the EIA said. It added that its forecasts were completed before the U.S. increased sanctions against Russian oil, "which have the potential to reduce Russia's oil exports to the global market."

The EIA expects global oil consumption to rise by 1.3 million barrels a day this year and by 1.1 million barrels a day in 2026, led by Asia where it sees India as the leading source of demand growth.


Write to Anthony Harrup at anthony.harrup@wsj.com


(END) Dow Jones Newswires

01-14-25 1451ET