EIA Cuts WTI Forecast by $7 on Trade War Fears

Energy Information Administration (EIA)

Energy agency slashes oil demand and production outlook through 2026 amid economic uncertainty

The U.S. Energy Information Administration (EIA) has sharply reduced its West Texas Intermediate (WTI) crude oil forecast due to escalating trade tensions. The benchmark U.S. crude is now expected to average $63.88 per barrel in 2025—down by $6.80 from last month’s estimate—and further decline to $57.48 in 2026, $7.49 below the previous projection.

Trade War Impacts Global Oil Demand

Ongoing trade disputes, especially between the U.S. and China, are significantly curbing global oil consumption. The EIA now expects worldwide demand to be nearly 500,000 barrels per day (b/d) lower in 2025 than forecasted just a month ago. For 2026, the reduction climbs to 620,000 b/d. These cuts reflect growing concerns over economic stagnation tied to U.S. tariffs and China’s retaliatory actions.

The delayed release of the April Short-Term Energy Outlook allowed the EIA to re-run models incorporating President Trump’s latest trade decisions. However, the forecast does not include updates from April 9, when Trump paused the harshest tariffs. Meanwhile, China has imposed new tariffs on U.S. goods, amplifying trade tensions.

Oil Price Forecasts Reflect Broader Weakness

Brent crude also saw significant downward revisions. The international benchmark is now forecast to average $67.68/bl in 2025 and $61.48/bl in 2026. These cuts align with a weakening demand outlook and lower expected production.

The EIA emphasized that its outlook remains “subject to significant uncertainty,” particularly as geopolitical and economic developments evolve rapidly. Banks and market analysts are also trimming their oil price forecasts, indicating broader skepticism in the market.

Lower Supply and Demand Across the Board

The EIA also cut its estimates for both global and U.S. oil production. Global output is expected to reach 104.1mn b/d in 2025 and 105.35mn b/d in 2026, down by 70,000 and 43,000 b/d respectively. In the U.S., domestic production is projected at 13.51mn b/d in 2025 and 13.56mn b/d in 2026—each figure 100,000 to 200,000 b/d lower than prior estimates.

U.S. consumption has been reduced to 20.38mn b/d for 2025 and 20.49mn b/d for 2026, down by 70,000 and 110,000 b/d respectively. These revisions underline the broad impact of trade policies and economic uncertainty on the energy sector.

As oil markets remain highly sensitive to macroeconomic shifts, all eyes are on future U.S.-China negotiations and their influence on crude pricing.