New Delhi: Global oil demand growth is now projected to average 750,000 barrels per day (b/d) in 2025, a downward revision of 500,000 b/d from the previous outlook, according to the latest analysis by S&P Global Commodity Insights. The report cites extreme uncertainty surrounding U.S. trade policy and a likely supply surplus as key reasons for the revision.
This marks a significant slowdown following an estimated year-over-year increase of 1.75 million b/d in the first quarter of 2025. For the remaining quarters, demand growth is expected to average 420,000 b/d.
Jim Burkhard, Vice President and Global Head of Crude Oil Research at S&P Global Commodity Insights, said, “Although the magnitude of a potential economic and oil demand downturn is as uncertain as the future course of U.S. tariffs, the impact will be negative. Initial warning signs of a potential downturn are only starting to come into view. The level of severity is now the big question.”
The report also revises U.S. crude oil production expectations, projecting a year-on-year decline in 2026 for the first time in nearly a decade—excluding the COVID-19 pandemic year of 2020. After averaging 13.46 million b/d in 2025—a gain of 252,000 b/d over 2024—U.S. production is expected to fall to 13.33 million b/d in 2026, a decline of 130,000 b/d.
S&P Global noted that output from offshore and long-lead time projects will sustain production this year, while price-sensitive shale output may slow with a lag.
“U.S. oil production growth has been a dominant feature in the oil market since 2022. A price-driven decline in U.S. production would be a pivot point for the oil market—and set conditions for a potential price recovery. But much will depend on the severity of an economic slowdown and the impact on demand growth beyond 2025,” Burkhard added.
The outlook is based on average prices in the mid-to-low USD 60s per barrel for Dated Brent, and in the low USD 60s to high USD 50s per barrel for West Texas Intermediate (WTI). However, the report notes that additional downside risk exists if trade barriers are not eased and if OPEC+ accelerates the reversal of existing production cuts.
Ian Stewart, Associate Director at S&P Global Commodity Insights, said, “Dizzying changes to U.S. tariffs—both real and proposed—are taking their toll on market sentiment. Our current outlook assumes that there will ultimately be some movement away from trade barriers to China as well as signs of progress in U.S. trade talks with Europe, Japan and other major trading partners. That means that the risk for additional downside is very real. Any periods of price strength are likely to be fragile.”
A previous analysis by the firm estimated that sustained WTI crude prices at USD 50 per barrel could lead to a drop of more than 1 million b/d in U.S. Lower 48 onshore production over a 12-month period.
