In the October Short-Term Energy Outlook (STEO), the US Energy Information Administration (EIA) lowered its Brent crude oil spot price forecast through end-2025.
The latest outlook predicts an average Brent price of $78/bbl in 2025, $7/bbl less than last month's forecast. Lower crude oil prices largely reflect a reduction for global oil demand growth in 2025, according to EIA.
"We forecast that global consumption of liquid fuels will increase by 900,000 b/d in 2024 and 1.3 million b/d in 2025. Our 2024 forecast is down from last month due to downward revisions to demand in China and our 2025 forecast is down primarily because of downward revisions to demand in OECD countries," EIA said.
"We reduced our forecast for China’s liquid fuels consumption in 2024 because of continued declines in the country's crude oil imports and refinery runs in third quarter 2024. Although the Chinese government recently announced monetary stimulus measures that could result in higher economic growth and petroleum consumption in 2025, we have kept our forecast 2025 growth rate largely unchanged. We forecast China’s petroleum and liquid fuels consumption will grow by about 100,000 b/d in 2024 and 300,000 b/d in 2025," the report continued.
"We reduced our forecast of total OECD oil consumption by 200,000 b/d in 2025 compared with last month's STEO as a result of weaker expectations for industrial production and manufacturing growth in the US and Canada."
Most of EIA's expected global liquid fuels demand growth is from non-OECD countries where liquid fuels consumption increases by 1 million b/d in 2024 and 1.2 million b/d in 2025, in contrast to consumption in OECD countries, which falls by 100,000 b/d in 2024 before increasing by a similar amount in 2025.
"Although we reduced our crude oil price forecast, crude oil prices have risen in recent days because of escalating conflict in the Middle East, raising the possibility of oil supply disruptions and further crude oil price increases," EIA noted.
The Brent crude oil spot price averaged $74/bbl in September, a decrease of $6/bbl from August. Prices dropped as concerns over global oil demand growth outweighed reductions in oil inventories and OPEC+ members' decision to delay production increases until December 2024. However, after recent military actions involving Israel, Lebanon, and Iran, the Brent spot price increased to $79/bbl on Oct. 4, up 11% from the previous week.
"The potential for further escalation– such as an Israeli response to Iran’s missile attack on October 1– have injected significant uncertainty and volatility into oil markets in recent days. Following the September drop in prices and our expectation that oil demand growth will be lower next year than we had previously forecast, we have lowered our forecast for crude oil prices despite increasing oil prices in early October. We now expect Brent will average $78/b in 2025, $7/bbl less than our forecast from last month," EIA said.
Global oil production
EIA anticipates that production growth outside of OPEC+ will remain strong over the forecast period, and as a result OPEC+ producers will likely keep production less than their recently announced targets for much of next year.
EIA expects that global production of petroleum and other liquid fuels will increase by 2 million b/d in 2025, up from growth of just 500,000 b/d this year. Countries outside of OPEC+ are expected to increase production by 1.4 million b/d next year, while OPEC+ production will increase by 700,000 b/d, after the voluntary cuts reduced OPEC+ production by 1.3 million b/d this year.
"In addition to voluntary cuts to OPEC+ production, a force majeure in Libya in August and September reduced oil production. We estimate Libya's crude oil production fell to 400,000 b/d in September 2024 from nearly 1.2 million b/d in July 2024 before the disruptions began," EIA said.
"As of early October, it appears the cause of the disruption has come to a resolution, with affected production potentially restarting in October. We assume Libya's oil production will average 600,000 b/d for the rest of this year."
EIA also revised its estimate of Iraq's crude oil production, including historical production, up by an average of 200,000 b/d in 2024 to account for assessment that more crude oil is being used in new refining capacity in Iraq than the agency had previously determined.
"Although we raised our assessment of Iraq's oil production, we still estimate that Iraq cut its crude oil production by 300,000 b/d from July through September 2024 to comply with OPEC+ production quotas."
In this month's outlook, EIA educed its 2025 forecast for US Lower 48 states (L48) crude oil production from last month by 1% to 11.3 million b/d. This reduction reflects a downward revision to EIA's West Texas Intermediate (WTI) crude oil price forecast.
EIA now expects WTI will average $72/bbl in fourth-quarter 2024, about $6/bbl lower than last month's forecast. Because there is about a 6-month lag between price changes and producer activity, the recent price declines will begin reducing US crude oil production in mid-2025. By December 2025, US L48 crude oil production will be 11.4 million b/d, 2% lower than EIA's September STEO forecast.
