By Shariq Khan
NEW YORK (Reuters) -Oil prices will be under pressure over the next two years as global production growth outpaces demand, the U.S. Energy Information Administration said on Tuesday in its Short-Term Energy Outlook report.
Many analysts expect an oversupplied oil market this year, after demand growth slowed sharply in 2024 in the biggest energy-consuming countries: the U.S. and China.
The EIA said it expects Brent crude oil prices to fall 8% to average $74 a barrel in 2025, then fall further to $66 a barrel in 2026.
The EIA slightly raised its estimate for record U.S. oil production this year, to 13.55 million barrels per day, from its prior estimate of 13.52 million bpd.
U.S. crude prices are expected to average $70 per barrel in 2025 and fall to $62 per barrel next year, said the EIA, the first time it is issuing an outlook for 2026.
The share of U.S. supply coming from the Permian Basin of Texas and New Mexico, the world's largest shale oil-producing region, is expected to continue to grow and account for more than half of all of the country's output in 2026, the report said.
Globally, oil and liquid fuel production is now expected to average 104.4 million bpd in 2025, up from the prior forecast of 104.2 million bpd, the EIA said.
The EIA cited a decision by the Organization of Petroleum Exporting Countries and allies to ease supply curtailments and expectations that non-OPEC producers will increase output.
Global demand, meanwhile, is expected to average 104.1 million bpd, down from the prior estimate of 104.3 million bpd, and still lower than pre-pandemic trends, the EIA said.