Trump's energy strategy encounters setbacks? The U.S. government lowers its oil production forecast for next year, marking the first reduction since 2021
The EIA's latest forecast indicates that U.S. crude oil production will decline from a record daily output of 13.5 million barrels in the second quarter of this year to 13.3 million barrels per day by the fourth quarter of 2026. The EIA noted that the number of active drilling rigs reported by oilfield services company Baker Hughes fell more than expected last month. The EIA expects oil prices to continue to decline as global inventories increase. Analysts state that the Trump energy strategy has encountered setbacks, as Trump previously stated that U.S. crude oil producers would ramp up production
On Tuesday, according to the Short-Term Energy Outlook released by the U.S. Energy Information Administration (EIA), U.S. crude oil production is expected to decline over the next 18 months as falling oil prices lead producers to reduce drilling activities.
The EIA's latest forecast indicates that U.S. crude oil production will decrease from a record daily output of 13.5 million barrels in the second quarter of this year to 13.3 million barrels per day by the fourth quarter of 2026. The EIA expects that the average daily production of U.S. crude oil this year will be slightly above 13.4 million barrels, and will be slightly below this level in 2026. This marks the first downward revision of oil production expectations by the EIA since 2021.
The EIA noted that the number of active drilling rigs reported by oilfield services company Baker Hughes fell more than expected last month. According to Baker Hughes data, as of last week, the number of rigs drilling for crude oil in the U.S. was 442, down by 50 from the same time last year, marking the lowest level since October 2021. Due to falling oil prices, producers have reduced capital expenditures, including drilling investments.
The EIA stated that as the number of active drilling rigs decreases, U.S. operators are expected to drill and complete fewer oil wells before 2026.
The EIA forecasts that global oil demand will grow by 800,000 barrels per day this year and by 1.1 million barrels per day in 2026. Meanwhile, global oil production is expected to increase by 1.6 million barrels per day this year and by 800,000 barrels per day in 2026.
The EIA pointed out that the slowdown in global oil demand growth, coupled with production increases from OPEC+ members and non-OPEC countries, leads it to expect that global crude oil production will exceed consumption during the forecast period, driving up global crude oil inventories and putting downward pressure on oil prices.
Regarding oil price forecasts, the EIA expects that oil prices will continue to decline as global inventories increase. The international benchmark Brent crude oil is expected to drop from $64 per barrel in May to $61 by the end of the year, averaging $59 per barrel in 2026. WTI crude oil is expected to fall to $57 per barrel in the fourth quarter of this year, with an average price of $56 per barrel in 2026.
Analysts say that Trump's energy strategy has encountered setbacks. Trump had stated that U.S. crude oil producers would ramp up production and declared a state of energy emergency at the beginning of his second term to increase output. However, several shale oil companies have warned that weak oil prices will impact production, with producers like Diamondback Energy Inc. stating that production has peaked.
On the same day, OPEC Secretary General Ghais stated at the Calgary Conference that there are no signs of a peak in oil demand. It is expected that oil demand will reach 120 million barrels per day by 2050. The lack of investment in oil and gas is dangerous. The International Energy Agency (IEA) turning around on oil investment issues is very concerning
