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By EPN Staff

Oil markets face heightened volatility driven by trade tensions, shifting supply strategies and potentially dwindling global economic growth.

Tariff announcements and OPEC+ production shifts have led multiple analysts, including the U.S. Energy Information Administration, to lower demand forecasts for 2025 and 2026 as global gross domestic product expectations drop by small – but significant – percentages.

Growth is still expected, but lower growth than predicted just months ago, and no one predicts certainty.

“Buckle up,” the International Energy Agency advised in a recent Oil Market Report.

Why it matters

Oil prices ripple through economies.

Recent revisions to price forecasts — with Brent crude expectations dropping from $74 to $68 per barrel for 2025, and further to $61 in 2026 — could translate into lower gasoline prices for drivers, but major drops can destabilize drilling and refining operations.

Oil and gas companies seem to be in strong financial shape to weather the impact of price drops and the uncertainty of policy shifts. Wood Mackenzie said recently that its resiliency index for the industry is “at a cyclical high after ten years of persistent capital discipline, buoyed by strong cash flows over the last four years.”

But there are limits, the group said, to how low prices can fall before dividends, jobs, and reinvestment come under pressure.

As for gas prices, the Energy Information Administration projects average summer gasoline prices of around $3.10 per gallon, the lowest inflation-adjusted summer price since 2020.

The bigger picture

OPEC in April said it expects global oil demand to rise by 1.3 million barrels per day in both 2025 and 2026, downward revisions from previous estimates. The cartel’s oil demand view is “at the higher end of industry forecasts” Reuters reports.

On the supply side, some OPEC+ countries surprised the market recently by accelerating production increases originally set for July, pushing oil prices lower. The full impact is unclear, though, since some members were already producing above target levels.

For many domestic companies and policy makers there’s a push to control what they can, and unease over President Donald Trump’s hard-to-predict tariff policies, which raise the prices of tubing, casing and other equipment crucial in oil production.

“For the sake of Houston, Texas, the U.S. and the whole danged globe, we hope that Trump stops sowing chaos and returns the world to something resembling economic stability,” The Houston Chronicle’s editorial board recently wrote.

Additional details

With all of this in the backdrop, exploration continues, and bp announced in mid April that it discovered oil 120 miles off the Louisiana coast in the Gulf of America, which Trump recently renamed from the Gulf of Mexico.

The find is in about 4,000 feet of water in the Far South prospect. It’s co-owned by bp, which will be the well operator, and Chevron USA.


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