U.S. could reduce oil production due to slow demand and falling crude oil prices: Standard & Poor’s
According to a new analysis by S&P Global Commodity Insights, the U.S. could reduce its oil output, which could lead to an annual output decline in 2026.
The report notes that global oil demand slows, extreme uncertainty about the future of U.S. trade and upcoming supply surpluses are expected to boost U.S. oil production.
The report, Standard & Poor’s Global Commodity Insights in the Short-term Outlook for the Global Crude Oil Market, found that global oil (total liquid) demand increased on average to an average of 750,000 barrels per day (B/d) per day in 2025, with a 500,000 b/d drop revision from the previous outlook.
“While the extent of the potential economic and oil demand decline is as uncertain as our future U.S. tariffs, the impact will be negative. The initial warning signs of a potential recession have just begun to emerge.
The new demand outlook represents a significant shift in momentum after a strong oil demand growth in the first quarter of the year, with demand growth estimated to increase by 1.75 million b/d year-on-year. By comparison, the report adds that demand growth is now expected to average 420,000 b/d for the remaining year.
The report added that the U.S. total production in 2025 is expected to average 13.46 million b/d (up 252,000 b/d year-on-year), then drop to 13.33 million b/d in 2026, down 130,000 b/d.
“Growth in U.S. oil production has been a major feature of the oil market since 2022. The decline in U.S. oil production prices will be a hub for the oil market and set conditions for potential price recovery. But it depends heavily on the severity of the economic slowdown and the impact of demand growth beyond 2025.”
Ian Stewart, deputy director of S&P Global Commodity Insights, said the dazzling changes to the U.S. tariffs, whether real or proposed, are causing losses to market sentiment.
“Our current outlook assumes that there will eventually be some movement from trade barriers to China, as well as signs of progress in trading with Europe, Japan and other major trading partners. This means that the additional downside risk is very real. Prices can be vulnerable in any price period.”
Published on May 14, 2025
