USA EIA Lowers 2025 Oil Price Forecast

Wedoany.com Report-Nov 16,  The U.S. Energy Information Administration (EIA) lowered its Brent spot average price forecast for next year in its latest short term energy outlook (STEO), which was released this week.

According to its November STEO, the EIA now sees the Brent spot price averaging $76.06 per barrel in 2025. In its previous October STEO, the EIA forecast that the Brent spot price would average $77.59 per barrel next year.

A quarterly breakdown included in the EIA’s latest STEO showed that the organization expects the Brent spot price to come in at $78 per barrel in the first quarter of 2025, $77.67 per barrel in the second quarter, $75.67 per barrel in the third quarter, and $73.02 per barrel in the fourth quarter.

In its previous STEO, the EIA projected that the Brent spot price would average $78 per barrel in the first quarter of next year, $79 per barrel in the second quarter, $77.67 per barrel in the third quarter, and $75.72 per barrel in the fourth quarter.

The EIA’s November STEO sees the Brent spot price averaging $80.95 per barrel this year. Its October STEO projected that the commodity would come in at $80.89 per barrel in 2024. Both STEOs put the 2023 Brent spot price average at $82.41 per barrel.

In its latest STEO, the EIA highlighted that the Brent crude oil spot price averaged $76 per barrel last month. The organization pointed out that this was up $2 per barrel from the average in September.

“Crude oil prices increased in October in part because of market concerns that an Israeli response to Iran’s missile attack on October 1 would reduce Iran’s ability to produce or market oil,” the EIA noted in its November STEO.

“However, Brent fell to $71 per barrel on October 29 after Israel’s military response did not target Iran’s oil infrastructure,” it added.

“Despite the drop in oil prices in late October, we still expect that ongoing withdrawals from global oil inventories stemming from OPEC+ production cuts, along with potential for further geopolitical risk, will put upward pressure on oil prices through the first quarter of 2025,” the EIA went on to state.

In its latest STEO, the EIA estimated that global oil inventories fell by 0.9 million barrels per day in the third quarter. It projected that these will drop by an average of 0.3 million barrels per day in the fourth quarter of this year and first quarter of 2025.  

“As a result, we expect the Brent price will rise from $72 per barrel on November 11 to an average of $78 per barrel in 1Q25,” the EIA said in the STEO.

“By 2Q25, we expect OPEC+ production increases and supply growth from countries outside of OPEC+ will outweigh global oil demand growth and cause oil to be put into inventory,” it added.

“We expect that global oil inventories will increase by an average of 0.4 million barrels per day in 2Q25, before inventories rise by an average of 0.6 million barrels per day in the second half of 2025,” it continued.

“We forecast that inventory builds will put downward pressure on crude oil prices, with Brent falling to an average of $74 per barrel in 2H25. In our forecast, the Brent price averages $76 per barrel for the full year of 2025,” the EIA went on to state.

In its November STEO, the EIA warned that it sees “at least two main sources of oil price uncertainty - the future course of the ongoing Middle East conflict and OPEC+ members’ willingness to adhere to voluntary production cuts”.

“First, although the volatility and risk premium associated with the conflict in the Middle East has moderated in recent weeks, the duration and severity of the ongoing conflict remain uncertain, as is the potential for escalation to reduce oil supplies,” the EIA noted.

“Second, although we assess that OPEC+ producers will likely continue to limit production below recently announced targets in 2025, the potential for weakening commitment among OPEC+ producers to continue cutting production adds downside risk to oil prices,” it added.