EIA reduces global oil demand projections on tariff uncertainties
In its April issue Short-Term Energy Outlook (STEO), the US Energy Information Administration (EIA) lowered its projections for global oil demand growth. The agency now expects global consumption to rise by 0.9 million b/d in 2025 and by 1.0 million b/d in 2026 — downward revisions of 0.4 million b/d and 0.1 million b/d, respectively, from last month’s forecast.
These estimates, which are based on economic projections from Oxford Economics completed before the latest tariff actions, are clouded by heightened uncertainty around global GDP growth.
Oil prices tumbled during the first week of April amid escalating trade tensions and shifts in oil production policy. On Apr. 2, President Donald J. Trump signed an Executive Order imposing 10% tariffs on imports from all countries, with even higher rates on selected nations. Just 2 days later, China retaliated with a 34% tariff on US imports. Meanwhile, OPEC+ announced on Apr. 3 that some member countries would bring forward planned production increases from July to May.
The rapid series of announcements triggered significant market volatility. By Apr. 7, Brent crude oil spot prices had plummeted 14% to $66/bbl. EIA expects continued volatility in crude oil and commodity prices as global markets digest the implications of the evolving trade landscape.
“Our reduction in liquid fuels demand growth compared with last STEO is concentrated in Asia as a result of US tariffs. Despite that uncertainty, we continue to see non-OECD Asia as the primary driver of global oil demand growth in the forecast. We expect India will increase its consumption of liquid fuels by 0.3 million b/d in both 2025 and 2026, compared with an increase of 0.2 million in 2024, driven by rising demand for transportation fuels. We forecast China’s liquid fuels consumption will grow by 0.2 million b/d in both 2025 and 2026, compared with an increase of 0.1 million b/d in 2024 as economic stimulus efforts drive higher demand growth,” EIA said.
Supply dynamics are also shifting. “Although we anticipate OPEC+ members will begin increasing production in April 2025, we expect they will produce below their current target path during most of the next two years to limit increases in global oil inventories and support prices. We expect OPEC+ producers will keep crude oil production mostly unchanged this year compared with the 2024 annual average, before increasing production by 0.5 million b/d in 2026,” EIA said.
“We still expect total liquid fuels production growth in our forecast to be led by countries outside of OPEC+, increasing by 1.2 million b/d in 2025 and by 0.7 million b/d in 2026. We expect the US, Canada, Brazil, and Guyana will drive production growth over the forecast period. Overall, we forecast global liquid fuels production will increase by 1.3 million b/d in 2025 and 1.2 million b/d in 2026.”
With OPEC+ preparing to unwind production cuts and non-OPEC supply on the rise, EIA forecasts that global oil inventories will begin to build by mid-2025. Consequently, Brent crude prices are expected to average $68/bbl in 2025 and decline further to $61/bbl in 2026 — both about $6–7 lower than previous estimates. Geopolitical factors, including existing sanctions on Russia, Iran, and Venezuela, could add further price instability.
US natural gas
On the natural gas front, US demand is forecast to grow by 4% in 2025 to 116 bcfd, driven by an 18% surge in exports and a 9% increase in residential and commercial heating consumption.
Much of the export growth stems from LNG, with two new export terminals ramping up operations. Notably, Plaquemines LNG Phase 1, which began exporting late last year, has exceeded initial expectations. EIA now projects US LNG exports to surpass 15 bcfd in 2025, about 7% higher than previously anticipated.
Despite China’s announcement on Apr. 7 that it would halt imports of US LNG, EIA assesses that ample global demand for LNG and flexible destination clauses in US LNG contracts mean US LNG exports will be largely unaffected by recent trade policy developments.
Relatively warm weather in March across much of the US limited the consumption of natural gas for space heating, leading to less natural gas being withdrawn from storage than EIA had forecast in the March STEO. However, US working natural gas inventories ended the withdrawal season (November–March) 4% below the 5-year average as cold weather in January and February resulted in more natural gas than average being withdrawn from storage. According to EIA, the Henry Hub benchmark is expected to average $4.30/MMbtu in 2025 — up $2.10/MMbtu from 2024 — and climb to about $4.60/MMbtu in 2026.
