The EIA Short Term Energy Outlook (STEO) was published recently. An estimate for World C+C output from November 2024 to December 2026 is presented in the chart below. This estimate is based on crude oil estimates in the STEO for OPEC12 nations, OPEC+ minus OPEC12 nations, and US C+C estimates and the trend in the ratio of the STEO crude estimates and C+C estimates from the EIA’s International Energy Statistics for OPEC12, OPEC+ minus OPEC12, and non-OPEC+ minus US C+C output from November 2018 to October 2024. For the next 4 charts the horizontal and vertical scales are the same, with 9 years on the horizontal axis and 12000 kb/d from the lowest to highest values on the vertical axis so the differences in rates of change are easier to compare. The thin line represents monthly data or forecasts after October 2024 and the markers with labels show the average annual output for each year.
Last month’s estimates using a similar method for estimation had 2024 at 81,841 kb/d, 2025 at 83,176 kb/d, and 2026 at 84,420 kb/d, slightly lower than this month’s STEO. Note that this STEO forecast is different from my forecast which is 82,640 kb/d in 2025 and 83,090 kb/d in 2026 for average annual World C+C output.
Last month’s estimate for OPEC+ was 44,903 kb/d in 2024, 45,183 kb/d in 2025, and 46,082 kb/d in 2026. OPEC+ output increases at an annual rate of about 530 kb/d from 2024 to 2026.
The Non-OPEC+ minus US estimate in last month’s report was 23723 kb/d in 2024, 24,449 kb/d in 2025, and 24,716 kb/d in 2026. The annual rate of increase from 2024 to 2026 for Non-OPEC+ minus US C+C is about 512 kb/d.
The US C+C estimate in last month’s report was 13,214 kb/d in 2024, 13,544 kb/d in 2025, and 13,623 kb/d in 2026. The annual rate of increase from 2024 to 2026 for US C+C is about 259 kb/d. To get a feel for how the STEO estimate might change over time I looked back at the US C+C STEO estimate from 12 months ago (estimate ended in 2025). The annual forecast for US C+C in that older report was about 100 kb/d lower then the current STEO forecast for both 2024 and 2025 even with higher oil price forecasts in the STEO from Feb 2024 compared with the current report. Natural gas prices were also forecast higher in 2024 in the Feb 2024 STEO, but 2025 Henry Hub spot prices were lower than the Feb 2025 STEO.
Note the big drop in oil prices forecast for 2026, this is the reason the EIA expects US C+C output will be nearly flat in 2026, the low oil prices are expected to lead to fewer new wells completed in tight oil plays and slower overall growth in tight oil which is barely high enough to offset falling output elsewhere in the US. US annual average C+C output rises by 137 kb/d in 2026 less than half of the increase in 2025 (380 kb/d).
The high World liquids supply relative to World Consumption in 2025 and 2026 leads to stock builds which drives down Brent oil prices from $77.13/b in 2025Q1 to $64/b in 2026Q4 (WTI falls from $73.62 to $60/b over the same period in the STEO forecast.)
The forecast above for Global liquids production looks very optimistic given the low oil prices in the forecast. Either output will be lower or prices will be higher than the STEO forecast, probably a bit of both.
The EIA expects demand for distillate fuel and jet fuel to increase in 2025 and 2026, while improved fleet efficiency for passenger vehicles leads to lower demand for gasoline. Low crude oil prices in 2026 leads to low growth in crude oil output.
Two planned refinery closures in the US (about 400 kb/d capacity combined) in 2025 and 2026 leads to lower refinery output in 2025 and 2026, this is offset by a lower refinery exports forecast for 2025 and 2026.
The higher natural gas prices in the forecast leads to higher US natural gas output and lower natural gas consumption in 2026. The share of natural gas used for electricity output falls from 43% in 2024 to 39% in 2026, in part due to higher natural gas prices.
The severe winter weather in 2025Q1 is expected to lead to large stock draws in natural gas.
Low stock levels of natural gas in 2025 and 2026 compared to the 5 year average leads to the forecast natural gas price increases.
While demand for electricity is forecast to increase in 2025 and 2026 the trend in coal consumption for electric power is a lower share falling from 34% in 2015 to about 15% in 2026. Natural gas used for electric power saw an increase from about a 32% share in 2015 to 43% in 2024 which is forecast to fall to 39% in 2026. The overall share of coal and natural gas for US electric power output is forecast to fall from 66% in 2015 to 54% in 2026. Wind and solar power output is forecast to rise from a 6% share in 2015 to roughly a 19% share in 2026.
The rising real electricity prices in the US are due to needed grid modernization (see link for more detail).
On an annual basis, Permian output continues to rise from 2025 to 2026, but the monthly forecast is pretty flat in 2026 probably due to the low prices in the STEO forecast. Other parts of the US lower 48 excluding Gulf of Mexico besides the Permian region see declining output in the second half of 2025 and most of 2026 (see chart below.)
Using Novi Data for Permian tight oil output and assuming conventional Permian region output is declining at about 3.5% per year, I get the following using EIA, RRC(TX), OCD(NM) data for the Permian region along with the Novi data through August 2023.
The estimate above only extends through October 2024 because typically there are future revisions to the most recent month estimate.
The chart above is in units of kb/d and represents Permian tight oil. The EIA STEO Regional Permian annual estimate had conventional output subtracted for 2025(443 kbd) and 2026 (427 kb/d). For 2024 the STEO Permian regional estimates for November and December 2024 were used with conventional output subtracted (453 and 451 for Nov and Dec respectively). The annual 2024 “STEO” estimate uses my Permian tight oil estimate for Jan to Oct 2024 along with the STEO Permian tight oil estimates from Nov and Dec 2024. The 2022 and 2023 annual “STEO” estimates are based on my Permian tight oil estimate (presented in previous chart) using TX, NM, EIA, and Novi data. The important differences are 2025 and 2026 where my estimate is considerably more conservative than the EIA estimate for Permian tight oil.
https://finance.yahoo.com/news/exxonmobil-seeks-permits-expand-oil-185600682.html
Exxon seeks permits to expand oil production in Guyana
Thanks for the report Dennis.
Interesting excerpt from your grid modernization link
https://www.eia.gov/todayinenergy/detail.php?id=63724
On electricity production costs over the last 20 years-
“Spending to produce electricity fell 24% from 2003 to 2023, mainly due to lower fuel costs and, to a lesser extent, the retirement of older, costlier-to-maintain fossil fuel plants. Fuel costs, the main operating expense, make up most of the production costs.
More recently, capital spending on electricity production increased by 23% ($4.7 billion) in 2023 compared with 2022. Most of this increase was driven by costs related to the construction of the Vogtle nuclear plant operated by Georgia Power. The fourth and final Vogtle unit entered commercial operation at the end of April 2024.”
On distribution- As pointed out earlier on the other thread, there is a big shortage and long lead time for electrical transformers, and the countries fleet of transformers is getting old.
https://www.utilitydive.com/news/electric-transformer-shortage-nrel-niac/738947/
Hickory,
You’re welcome, interesting piece, I was not aware there was such a problem with transformer availability.
We had two leases down for almost two months after our transformers were destroyed in a storm. Of course, we were towards the end on the priority list. That was March, 2023.
I think the idea that the US will provide Europe with oil and gas is at best an illusion. Maybe natural gas for some time, but both shale gas and especially tight oil will peak soon. 87% of US federal waters are off limits for oil exploration, so there might be more oil and gas on the East and West coast of America. Saudi Arabia is also probably close to maxed out production and will not be able to increase much more if the current White House administration demands it.
Thanks for great work Dennis, seems there will not be much increase in US oil production.
“I’m afraid we’ve never been this close to Orwell’s ‘war is peace, freedom is slavery, and ignorance is strength’ before.”
—Vít Rakušan, Czech minister of the interior, on X after U.S. President Donald Trump blamed Ukrainian President Volodymyr Zelensky for starting Russia’s war in Ukraine
McKibben says the quiet part out loud about pending purchases of US LNG by Japan, India and Taiwan.
https://billmckibben.substack.com/p/nice-little-economy-youve-got-there
Texas earthquake and exploding pipeline.
https://www.houstonchronicle.com/news/investigations/article/earthquakes-west-texas-pipeline-explosion-oil-20173749.php