(WO) — U.S. oil production growth, a key driver of the global oil market, is slowing, according to the latest analysis from S&P Global Commodity Insights. The slowdown in production outside OPEC+, particularly in the U.S., is expected to narrow the global oil market surplus in 2025, though production will still outpace demand.
The S&P Global Commodity Insights Global Crude Oil Markets Short-Term Outlook has revised down its forecast for non-OPEC+ crude oil production growth, including condensate. The latest projection for the second half of 2024 is 829,000 barrels per day (bbl/d), 390,000 bbl/d lower than the previous forecast. For 2025, the growth outlook is now roughly 1.2 million bbl/d, a reduction of 570,000 bbl/d from earlier estimates.
The downward revision is largely attributed to lower-than-expected U.S. crude production growth. S&P Global now expects U.S. crude growth to be 182,000 bbl/d in the second half of 2024, 174,000 bbl/d less than initially forecast. For 2025, U.S. production is anticipated to grow by 429,000 bbl/d, down 311,000 bbl/d from earlier predictions.
" The reason for the cut in our U.S. supply growth expectation is simple—there has been less upstream activity so far this year than previously anticipated," said Jim Burkhard, vice president and head of research for oil markets, energy and mobility at S&P Global Commodity Insights. "The U.S. is still on track to produce more oil in 2025 than any other time in history. However, the degree by which it surpasses the previous record has reduced substantially."
While U.S. supply growth is slowing, this does not necessarily signal higher prices. OPEC+ has reaffirmed plans to increase production later this year, and with additional supply from the group, the global oil market remains on course to be oversupplied in 2025. However, OPEC+ could adjust its production policy, meaning higher supply is not guaranteed. Nonetheless, S&P Global Commodity Insights expects more output to maintain unity within the group.
Despite the cut to the U.S. production outlook, S&P Global Commodity Insights anticipates crude oil prices in 2025 to be lower, on average, than in 2024.
"The pace of supply growth is slowing, but that coincides with decelerating global demand. Factor in the prospect of additional OPEC+ barrels coming into the mix, and it all adds up to a potentially oversupplied crude market in 2025," Burkhard added.
