WASHINGTON — Despite recent drops in U.S. crude oil stockpiles, the global energy market is facing growing concerns of a looming oversupply, with production remaining robust from key global producers. According to a report from the U.S. Energy Information Administration (EIA), global liquid fuels production is projected to increase by 2.0 million barrels per day (b/d) in the second half of 2025. This increase is being led by both OPEC+ and non-OPEC producers, including the United States, Brazil, and Norway.
The output stability is occurring even as market forecasts suggest a potential imbalance between supply and demand. According to an analysis by McKinsey & Company, U.S. shale oil production has remained steady at 9.0 million b/d for the third consecutive month as of July, while global commercial inventories saw a slight increase. This persistent output, coupled with a forecast of slower demand growth, is fueling concerns about a surplus.
The International Energy Agency (IEA) has warned that the market could face a “record surplus” in the near future. This sentiment is echoed by analysts from BMI, who stated in a report cited by Morningstar that the market is “on track to tip into surplus in Q4 2025.” This anticipated oversupply is expected to put significant downward pressure on oil prices, with the EIA forecasting that the Brent crude oil spot price will fall from $71 per barrel in July to $58/b in the fourth quarter of 2025.
In the United States, the falling prices are expected to curb domestic drilling and well completion activity that has been ongoing for most of the year. The EIA forecasts U.S. crude oil production will decline to 13.1 million b/d by the fourth quarter of 2026 as a result of lower prices.