New Delhi, May 14
United States may reduce its oil production which could lead to an annual decline in output in 2026 due to the sluggish demand and falling crude prices, according to a new analysis by S&P Global Commodity Insights.
New Delhi [India], May 14 (ANI): United States may reduce its oil production which could lead to an annual decline in output in 2026 due to the sluggish demand and falling crude prices, according to a new analysis by S&P Global Commodity Insights.
The report further added that slowing global oil demand, extreme uncertainty about the future of US trade and a coming supply surplus are expected to hobble US oil production growth.
The S&P Global Commodity Insights Global Crude Oil Markets Short-term Outlook adds that global oil (total liquids) demand growth to average 750,000 barrels per day (b/d) in 2025, a downward revision of 500,000 b/d from the prior outlook.
"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," as per Jim Burkhard, Vice President and Global Head of Crude Oil Research, S&P Global Commodity Insights.
The new demand outlook represents a significant shift in momentum following strong oil demand growth in the first quarter of the year when demand grew by an estimated 1.75 million b/d year-over-year.
In contrast, demand growth for the remaining quarters of year is now expected to average 420,000 b/d, the report added.
The report adds that the total U.S production for 2025 is expected to average 13.46 million b/d (gain of 252,000 b/d year-over-year) before falling back to 13.33 million b/d for 2026--a 130,000 b/d decline.
"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.
Ian Stewart, Associate Director, S&P Global Commodity Insights said that 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," Stewart added.
— ANI
Reader Comments
This could be good news for India's fuel prices if global crude rates fall further. Our government should use this opportunity to build strategic reserves while prices are low. Less US production might reduce pressure on dollar outflows too. 🇮🇳
Interesting analysis but I'm skeptical about demand slowdown predictions. With Indian economy growing at 7%+, our oil consumption will keep rising. Maybe US should look at Asian markets more carefully before cutting production!
The timing is crucial for India. We should negotiate long-term supply contracts now when prices are favorable. Also hope our refiners are prepared to handle any market volatility - remember how Ukraine war disrupted everything overnight.
Instead of worrying about US production cuts, India should focus more on renewable energy. We have so much solar potential! â˜€ï¸ Every oil price fluctuation reminds us how vulnerable we are to global markets. Time to accelerate green energy plans.
The report mentions US-China trade tensions affecting oil demand. This shows how interconnected global markets are. India should maintain balanced relations with all major economies to safeguard our energy security. No putting all eggs in one basket!
While lower oil prices may seem beneficial, we must remember that sustained low prices could hurt domestic exploration. ONGC and other Indian companies need reasonable prices to justify their investments. It's a delicate balance.
Here are 6 diverse Indian perspective comments for the article: We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.