EIA expects the price of crude oil to fall to below $60 per barrel by the end of the year and average near $50 per barrel through 2026.
The U.S. Energy Information Administration (EIA) expects a significant decline in the price of oil as growth in the global supply of oil vastly surpasses growth in demand for petroleum products. In its August Short-Term Energy Outlook (STEO), EIA expects the Brent crude oil spot price to average less than $60 per barrel in the fourth quarter of 2025—the first quarter with average prices that low since 2020.
OPEC+ announced in early August week that it will unwind its oil production cuts by September 2025, which is a year ahead of its previous schedule. For the first time since EIA began publishing an OPEC+ production forecast in 2023, EIA expects most global oil production growth to come from OPEC+ countries. EIA forecasts the supply growth will outpace demand, leading to quickly growing inventories.
“There’s a lot of uncertainty in the petroleum market. In the past, we have seen significant drops in oil price when inventories grow as quickly as we are expecting in the coming months,” said EIA Acting Administrator Steve Nalley. EIA expects lower oil prices to lead to lower U.S. retail prices for gasoline and diesel and to pull domestic oil production down from the record highs in 2025.
Short-Term Energy Outlook
• Global oil prices. The Brent crude oil price in our forecast declines significantly in the coming months, falling from $71 per barrel (b) in July to $58/b on average in the fourth quarter of 2025 (4Q25) and around $50/b in early 2026. The price forecast is driven largely by more oil inventory builds following OPEC+ members’ decision to accelerate the pace of production increases. We now expect global oil inventory builds will average more than 2 million barrels per day (b/d) in 4Q25 and 1Q26, which is 0.8 million b/d more than in last month’s STEO. Low oil prices in early 2026 will lead to a reduction in supply by both OPEC+ and some non-OPEC producers, which we expect will help moderate inventory builds later in 2026. We forecast the Brent crude oil price will average $51/b next year, down from our forecast of $58/b in last month’s STEO.
• U.S. crude oil production. We expect increases in well productivity will push U.S. crude oil production to an all-time high near 13.6 million b/d in December 2025. However, as crude oil prices fall, we expect U.S. producers will accelerate the decreases in drilling and well completion activity that have been ongoing through most of this year, and we forecast U.S. crude oil production will decline to 13.1 million b/d by 4Q26. On an annual basis, we now forecast crude oil production will average 13.4 million b/d in 2025 and 13.3 million b/d in 2026.
• U.S. gasoline prices. Lower crude oil prices push down retail prices for petroleum products in our forecast. We expect the price for retail gasoline across the U.S. will average less than $2.90 per gallon (gal) next year, about 20 cents/gal (6%) less than this year.
• U.S. distillate inventories. U.S. total distillate fuel inventories in our forecast end 2025 at the lowest end-of-year level since 2000, after decreasing 14% over the course of the year primarily due to increased U.S distillate exports and increased demand for petroleum-based distillate. We expect lower domestic distillate production because of decreased U.S. refinery capacity and continued strong export demand to keep inventory levels low throughout the forecast period, with distillate inventories remaining relatively flat in 2026. Ongoing low inventories will keep distillate fuel refining margins high during the forecast period.
• Natural gas prices. We expect the Henry Hub natural gas spot price will rise from an average of $3.20 per million British thermal units (MMBtu) in July to $3.90/MMBtu in 4Q25 and $4.30/MMBtu next year. Rising natural gas prices reflect relatively flat natural gas production amid an increase in U.S. liquefied natural gas exports.
• Electricity consumption. Electricity demand growth in our forecast is driven by the commercial and industrial sectors. We expect electricity sales to the commercial sector to rise by 3.0% in 2025 and 4.5% in 2026, driven largely by more demand from data centers, while electricity sales to industrial consumers rise by 2.0% in 2025 and 3.5% in 2026.
• Coal exports. We forecast a 10% decline in coal exports in 2025, reflecting a global market characterized by persistent oversupply and lower coal prices for both steam and metallurgical coal. Steam coal exports in our forecast fall 7% this year to 47 million short tons (MMst) and decline 5% in 2026 to below 45 MMst. Metallurgical coal
exports fall 13% this year to 50 MMst in 2025 and remain near that level next year.
• Trade policy assumptions. The U.S. macroeconomic outlook we use in STEO is based on S&P Global’s macroeconomic model. S&P Global’s most recent model reflects the tariffs announced in April and includes the 90-day temporary suspension of tariffs granted to most countries. S&P Global’s model assumes reduced tariffs on imports from China compared with last month, but the model assumes tariffs on imports from other countries to remain at 10% after the 90-day pause expired in July. Release Date : August 12 , 2025 | Forecast Completed : August 7 , 2025
A small but increasing amount of biodiesel in the United States is consumed in the residential, commercial, and electric power sectors, according to new estimates now published in EIA’s State Energy Data System. Previously, EIA allocated all U.S. biodiesel consumption to the transportation sector, where the vast majority of biodiesel is consumed.
Biodiesel is a renewable fuel produced using fats, oils, or greases usually blended with petroleum diesel and consumed by trucks. In 2023, the most recent year for which we have estimates, the transportation sector accounted for about 95% of the nearly 46 million barrels of biodiesel consumed in the United States.
Biodiesel can also be blended with heating oil to heat homes and businesses. We estimate that the residential and commercial sectors combined accounted for nearly 5% of U.S. total biodiesel consumption in 2023, up from about 1% a decade earlier. The introduction of biofuel blending mandates for heating oil in some northeastern states is contributing to that growth.
Although customers in other states likely blend biodiesel to heat homes and businesses , we only estimate consumption for New York, Connecticut, and Rhode Island.
Consumption of biodiesel in the residential and commercial sectors is higher in New York than in any other state, accounting for 57% of the U.S. total for those sectors in 2023. New York City passed the nation’s first law requiring biodiesel blending with heating oil, mandating a minimum 2% biodiesel blended with heating oil beginning in 2012. Later, New York enacted a 5% minimum state-wide blend law beginning in 2022, which increases to 10% in 2025 and 20% in 2030. According to the U.S. Census Bureau’s American Community Survey, nearly 16% of homes in New York used heating oil as their primary heat source in 2023, about four times more than the U.S. average of about 4%.
Connecticut and Rhode Island also have similar state-wide minimum biofuel blend laws for heating oil. Connecticut’s 5% blend law began in 2022 and ramps up to 10% in 2025, 15% in 2030, 20% in 2034, and 50% in 2035. Rhode Island was the first state to enact a minimum biofuel heating oil blend law that began with a 5% blend in 2017 and increased to 10% in 2023. Rhode Island’s blend law increases more quickly than the other states—up to 20% in 2025 and 50% in 2030. More than 34% of homes in Connecticut and 26% of homes in Rhode Island reported heating oil as their primary heat source in 2023.
Biodiesel can also be burned to generate electricity, and the electric power sector accounted for less than 1% of U.S. biodiesel use in 2023. In 2006, a test plant in Tennessee reported the first biodiesel use for electric power in the United States. Hawaii has accounted for nearly all U.S. biodiesel consumed for electric power since 2009. In 2023, petroleum fueled about 68% of Hawaii’s total electricity generation, the highest share of any state, and we estimate that biodiesel fueled about 1% of the state’s total generation. l FON
Principal contributor : Mickey Francis