The U.S. Energy Information Administration (EIA) projects a sharp decline in global oil prices in late 2025, driven by an acceleration in supply growth — primarily from OPEC+— that will far outpace petroleum demand.
In its August Short-Term Energy Outlook (STEO), the agency forecasts the Brent crude oil spot price will average below $60 per barrel in the fourth quarter of 2025, the first time prices have dropped to that level since 2020. Prices are expected to fall from more than $70 per barrel in July 2025 to around $58 in Q4 2025, before averaging just above $50 per barrel in 2026.
The downward price pressure follows OPEC+’s decision to fully unwind production cuts by September 2025—one year ahead of schedule. For the first time since EIA began publishing an OPEC+ forecast in 2023, most global supply growth is expected to originate from the bloc. EIA anticipates inventory levels will expand rapidly in the coming months.
“In the past, we have seen significant drops in oil price when inventories grow as quickly as we are expecting,” said EIA Acting Administrator Steve Nalley.
U.S. Output to Peak in 2025 Before Declining
EIA projects U.S. crude oil production will reach an all-time monthly high of nearly 13.6 million barrels per day in December 2025, supported by strong well productivity. However, lower prices in 2026 are expected to trigger a pullback in drilling and completions, reducing output to an average of 13.3 million b/d.
Lower crude prices are also expected to drive U.S. retail gasoline and diesel prices down in 2026, with gasoline averaging about $2.90 per gallon and on-highway diesel falling below $3.50 per gallon — both around 20 cents lower than in 2025.
Natural Gas Prices to Rise Amid Flat Production
EIA expects U.S. Henry Hub natural gas spot prices to climb from $3.20/MMBtu in July 2025 to nearly $3.60 in the second half of 2025, reaching $4.30/MMBtu in 2026 as LNG export demand strengthens.
Electricity Demand Growth to Remain Above 2 percent
Electricity consumption is forecast to grow by more than 2 percent annually in both 2025 and 2026. Commercial sector sales are projected to rise 3.1 percent in 2025 and 4.9 percent in 2026, while industrial sector sales are expected to grow 1.8 percent and 3.0 percent respectively.
Coal Output to Edge Higher Before Falling
Coal production is expected to reach 520 million short tons (MMst) in 2025, about 2 percent higher than in 2024, as coal regained cost competitiveness against natural gas. However, output is forecast to drop to 491 MMst in 2026 amid further plant retirements and high stockpiles built in 2025.
Geopolitical and Policy Risks Could Shift Outlook
EIA cautions that the forecast is subject to heightened uncertainty, citing risks such as a breakdown in the Israel–Iran ceasefire, further sanctions linked to the Russia–Ukraine conflict, changes in OPEC+ output policy, and the outcome of U.S. trade negotiations.
Trade policy assumptions are based on S&P Global’s macroeconomic model, which factors in April’s announced tariffs, the 90-day suspension for most countries, reduced tariffs on imports from China, and a 10 percent tariff rate for other imports following the July suspension expiry.
GreentechLead.com News Desk