Global oil markets

Global oil prices and inventories
Crude oil prices fell sharply in the first week of April as oil market participants assessed announcements that the United States would impose new tariffs and OPEC+ would accelerate production increases. These announcements increase the likelihood that global oil inventories will rise in the coming month and have the potential to put further downward pressure on oil prices. As a result, we have reduced our Brent crude oil spot price forecast by $6 per barrel (b) in 2025 and by $7/b in 2026 compared with our March STEO. We now expect Brent will average $68/b this year and $61/b next year.

We anticipate that global oil inventories will start to increase in the second quarter of 2025 (2Q25). Inventories begin building sooner than previously expected, mostly because we raised our expectation of OPEC+ production in the coming quarters and lowered our expectation of oil demand growth. We expect global oil inventories will increase by 0.6 million b/d in 2Q25 and by 0.7 million b/d on average in the second half of 2025 (2H25), and inventories will continue to accumulate at that pace in 2026.

Given our expectation of significant increases in oil inventories beginning in 2H25, we forecast that the Brent crude oil price will generally decline throughout the forecast period. As global oil inventories rise, we expect the Brent crude oil price will fall from an average of $76/b in 1Q25 to an average of $64/b by 4Q25 and will average $61/b overall next year.

Significant uncertainty remains in our price forecast. The effect that new or additional tariffs will have on global economic activity and associated oil demand is still highly uncertain and could weigh heavily on oil prices going forward. The implementation of energy-sector sanctions on Russia and Iran, as well as the wind down of Chevron’s Venezuela oil exports, have increased oil price volatility in the short term while markets and trade patterns adjust. In addition, the pace at which OPEC+ decides to unwind production cuts and the level of adherence to announced production targets continues to evolve.

Global oil production and consumption
Global liquid fuels production in our forecast increases in 2025 and 2026 because of the scheduled gradual increase in OPEC+ production and further growth from countries outside of OPEC+.

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.

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 United States, 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.

Oil consumption in our forecast continues to be below its pre-pandemic trend. Recently announced trade policies mean the uncertainty around global oil demand growth has risen significantly. We expect world consumption of petroleum and other liquid fuels to be 0.9 million b/d more in 2025 than it was last year, with growth of 1.0 million b/d in 2026.

Our reduction in liquid fuels demand growth compared with last STEO is concentrated in Asia as a result of U.S. 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.