(Bloomberg) — The US slashed its forecasts for global oil demand growth and domestic crude production as US President Donald Trump’s tariff moves puts a cloud over the economic outlook.
Global oil demand is now expected to grow by about 900,000 barrels a day in 2025, according to the Energy Information Administration’s Short-Term Energy Outlook released Thursday. That’s about 400,000 barrels a day lower than last month’s estimate.
US crude prices have plunged more than 15% in April and are trading near a four-year low as traders assess the outlook for demand amid Trump’s salvos with major trading partners. While the American president on Wednesday announced a 90-day pause on higher tariffs that hit dozens of countries, he also raised duties on China. There’s growing concern that an escalation of the trade war between the world’s two biggest economies will bring lasting damage to global growth.
The EIA prepared its forecast prior to Wednesday’s tariff news. The agency had earlier delayed the report release by two days, citing a need to rerun its models to account for recent market developments.
Oil prices have also been hit by plans from OPEC+ to boost output, leading to concerns of oversupply.
Meanwhile, US production is expected to fall to 13.56 million barrels a day next year, down from a previous projection of 13.76 million.
There’s growing unease in the US shale patch as Trump’s effort to rewrite global trade rules will undermine his goal to supercharge fossil fuel production and achieve “energy dominance.” Executives are loath to boost US oil supply with West Texas Intermediate down more than 20% since Trump’s inauguration less than three months ago. It’s now hovering around $60 a barrel, below the level they say they need for new wells to break even, according to a survey by the Federal Reserve Bank of Dallas.
The EIA also projected that gasoline prices will average $3.10 a gallon in the peak summer months, when refiners make most of their profits. That’s 20 cents lower than their last outlook and the lowest inflation-adjusted summer cost for drivers since 2020.
Although cheaper oil lowers the main input cost for refineries across the US, the demand outlook for travel is far from certain.
(Updates with gasoline projections)
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