Supply squeeze: US oil output growth set to falter in 2025; S&P warns of sharp 2026 decline amid global glut
The United States, long the engine of global crude supply growth, is expected to face a steeper-than-expected slowdown in production growth in 2025 and a sharper decline in 2026, according to S&P Global Commodity Insights' latest short-term outlook.
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The report warns that the US will be "disproportionately impacted" by a looming global oil surplus and weakening demand, factors that are set to weigh heavily on prices and shift market dynamics. The projection comes on the heels of OPEC+ members deciding to fast-track the rollback of production cuts, adding further pressure on global supply balances.
S&P Global anticipates year-on-year global crude oil and condensate production to rise by 2.2 million barrels per day in the second half of 2025, while demand is projected to grow by just 390,000 barrels per day over the same period.
'Annual global oil demand growth in 2025 is expected to average only 770,000 barrels per day—its weakest pace since 2001, excluding major downturns,' the report noted, pointing to a slowdown in consumption growth not seen since the global financial crisis or the pandemic years.
Jim Burkhard, Vice President and Global Head of Crude Oil Research at S&P Global, said the market is highly vulnerable: '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.'
As a result, the outlook for benchmark oil prices has been revised downward, with Dated Brent expected to hover between the mid-$60s and $50 per barrel, and West Texas Intermediate (WTI) potentially falling into the upper $40s.
Among non-OPEC producers, the US is forecast to take the biggest hit, with growth slowing more than in countries like Canada, Guyana, or Brazil.
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Ian Stewart, Associate Director at S&P Global Commodity Insights, noted that weak US crude supply growth could shift market sentiment. '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,' he said, adding that outcomes will also hinge on future OPEC+ production decisions and global demand conditions
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