US oil production to fall by 640,000 bpd by end-2026 amid surplus, demand slowdown: S&P Global
New Delhi: The United States is likely to see its oil production fall by 640,000 barrels per day (bpd) by the end of 2026 from mid-2025 levels, according to
S&P Global Commodity Insights
, which cited a weaker demand environment and an oversupplied global market as key drivers.
S&P Global's latest Global Crude Oil Markets Short-term Outlook projects US oil production to average 13.34 million bpd in 2025, a growth of 131,000 bpd over the previous year, but 122,000 bpd lower than its earlier forecast. Production is expected to decline to 12.96 million bpd in 2026, marking the first year-on-year drop since 2020 and a fall of 378,000 bpd from previous projections.
'By the end of 2026, US oil production could be down 640,000 bpd from what it was in mid-2025,' the report stated.
The outlook also highlighted that year-on-year global crude oil and condensate production is expected to grow by 2.2 million bpd in the second half of 2025. In comparison, demand is projected to increase by only 390,000 bpd over the same period.
Total global liquids demand growth for 2025 is expected to average 770,000 bpd—its lowest annual increase since 2001, excluding the financial crisis of 2008–09 and the COVID-19 pandemic in 2020.
This widening gap between supply and demand has prompted S&P Global to revise its crude price forecast. Dated Brent is expected to trade between mid-$60s and $50 per barrel for a period, while West Texas Intermediate (WTI) may drop to the low $60s or upper $40s.
'The oil price is currently defenseless. Seasonal demand in the northern hemisphere summer may obscure the impact for a bit, but eventually there will be too much crude oil in the market absent a change in production trends,' said Jim Burkhard, Vice President and Global Head of Crude Oil Research at S&P Global Commodity Insights.
S&P Global noted that US shale production, due to its higher sensitivity to price signals, is more vulnerable than other sources of non-OPEC supply such as Canada, Guyana, and Brazil.
'In a lower price environment, US operators are likely to protect shareholder returns by reducing upstream spending. The result is a deceleration in growth to end the year, with the greatest impacts to production coming in 2026,' Burkhard said.
Ian Stewart, Associate Director at S&P Global Commodity Insights, said, 'The United States has been the biggest source of supply growth in recent years and a factor in OPEC+ supply restraint. Signs of weak US crude supply growth and decline could begin to alter oil market psychology. However, much will still depend on the future course of OPEC+ production and oil demand.'
The report follows the recent decision by OPEC+ members to accelerate the unwinding of production cuts. This, combined with output growth from other regions, is expected to add further pressure on prices.
S&P Global added that a significant decline in US production could contribute to a potential price recovery in the future, depending on demand growth and production policy adjustments by OPEC+ and other major producers.
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