Global oil markets

Global oil prices
The Brent crude oil spot price averaged $68 per barrel (b) in April, $5/b lower than in March. Crude oil prices fell for the third consecutive month, driven primarily by expectations of lower global oil demand growth following the implementation of new tariffs from the United States and its largest trading partners. In April, OPEC+ members also reaffirmed and accelerated their planned production increases, adding to expectations that global oil inventories will grow and put additional downward pressure on oil prices. We expect Brent crude oil prices will average $66/b this year and $59/b next year.

Crude oil prices have been lower this year than we expected in our January 2025 STEO release, which largely reflects lower expectations for global oil demand growth both among market participants and in our forecast. Since the January release, we have reduced our expectations for global oil demand by a total of 0.5 million barrels per day (b/d) throughout the forecast period, while we have lowered the Brent crude oil price forecast by $8/b on average. With less oil being consumed this year, oil inventories have risen. We estimate about 0.3 million b/d of oil was put into inventory during the first four months of 2025. In our January outlook, we had expected inventories to fall by more than 0.2 million b/d over this period. Perceptions of oversupply among oil market participants also reflect production growth from non-OPEC producers, along with announced production increases from OPEC+. In addition to our lower forecast for global oil demand compared with January, uncertainty about tariff rates and the degree to which those tariffs will affect economic growth and, in turn, oil demand growth has also led to an increase in short-term price volatility.

High levels of implied volatility—a measure of market participants’ expectations for the range of crude oil futures price changes—suggest considerable market uncertainty. Since early April, crude oil implied volatility has averaged more than 35%, based on futures and options contract data from the CME Group, with daily Brent crude oil implied volatility reaching as high as 39% on April 8. With the exception of periods of heightened risks of supply disruptions from geopolitical events—such as concerns over the potential for widening conflict in the Middle East that occurred last October—implied volatility has generally been less than 30% since the beginning of 2024. The recent increase in implied volatility has been mostly driven by concerns of an economic slowdown or recession, rather than any risk of supply disruption. As a result, the increased volatility has been reflected primarily in downward oil price movements over recent weeks.

We anticipate that global oil inventories will start to increase in 2025, growing 0.5 million b/d on average in the second quarter of 2025 (2Q25) before increasing by 0.7 million b/d in 4Q25. We expect global oil inventories to grow on average by 0.4 million b/d in 2025 and accelerate to 0.8 million b/d on average in 2026.

Given our expectation that oil inventories will accumulate over the next several quarters, we forecast that Brent crude oil prices will generally decline throughout the forecast period. As global oil inventories begin to grow, we expect Brent crude oil prices will fall from an average of $76/b in 1Q25 to an average of $61/b by 4Q25 and will average $59/b overall next year.

Significant uncertainty remains in our price forecast. The effect that new or additional tariffs will have on global economic activity and associated oil demand is still highly uncertain and could weigh heavily on oil prices going forward. The implementation of energy-sector sanctions on Russia and Iran as well as the wind down of Chevron’s Venezuela oil exports have increased uncertainty in the short term while markets and trade patterns adjust. In addition, the pace at which OPEC+ decides to unwind production cuts and the level of adherence to announced production targets continues to evolve.

Global oil production and consumption
Global liquid fuels production growth in our forecast increases in 2025 and 2026 due to a combination of the scheduled increase in OPEC+ production and further growth from countries outside of OPEC+. Global liquid fuels production increases by 1.4 million barrels per day (b/d) in 2025 and 1.3 million b/d in 2026.

Although OPEC+ members recently announced they plan to raise production in June, we still anticipate the group will produce below the current target path. We expect crude oil production growth of 0.1 million b/d in 2025 from OPEC+, compared with a decrease of 1.4 million b/d in 2024, before increasing by 0.6 million b/d in 2026.

We still expect production growth in our forecast to be led by countries outside of OPEC+, increasing by 1.2 million b/d in 2025 and by 0.6 million b/d in 2026. We expect the United States, Canada, Brazil, and Guyana will drive production growth over the forecast period.

Oil consumption growth in our forecast continues to be less than the pre-pandemic trend. Forecast global liquid fuels consumption increases by 1.0 million b/d in 2025 and 0.9 million b/d in 2026, 0.4 million b/d and 0.1 million b/d lower than forecast in our January STEO, respectively. We expect India will increase its consumption of liquid fuels by 0.2 million b/d in 2025 and 0.3 million b/d in 2026, compared with an increase of 0.2 million in 2024, driven by rising demand for transportation fuels. We forecast China’s liquid fuels consumption will grow by 0.2 million b/d in both 2025 and 2026.