The US Energy Information Administration (EIA) expects recent developments in global trade policy and oil production to contribute to lower global demand growth for petroleum products through 2026, which contributes to significantly lower oil prices than previously forecast.
In its ‘April Short-Term Energy Outlook (STEO)’, EIA points out significant uncertainties in energy supply, demand, and prices.
The STEO is based on current market conditions, and in the first week of April, numerous developments affected the global market – especially oil markets. On 2 April, President Donald Trump signed an Executive Order announcing a minimum 10% tariff on imports from all countries, which also included higher tariffs on some countries. On 4 April, China responded by imposing 34% tariffs on imports from the US. Amid the tariff announcements, OPEC+ members announced on 3 April that some countries will start oil production increases in May that were originally set for July.
These announcements caused the Brent crude oil spot price to fall by 12% on April 2 to US$68/bbl on 4 April. EIA completed its forecasts on 7 April, so the April STEO includes some of the recent changes in the energy market, but the agency expects continued volatility as market participants respond to further developments.
Some key highlights from the April STEO include:
Global oil supply, demand, and prices
EIA expects continued growth in US and global oil production as OPEC+ accelerates its previously announced production increases and the US exempts energy from its recently announced tariffs. EIA expects global oil inventories to increase starting in the middle of 2025, but market uncertainty could lead to lower economic growth, which could lead to less growth in demand for petroleum products than EIA had previously forecast. The combination of growing supply and lower demand leads EIA to expect the Brent crude oil price to average less than US$70/bbl in 2025 and fall to an average of just over US$60/bbl in 2026. Those prices are about 10% lower than the March STEO forecast and reflect more uncertainty around global oil demand growth as well the potential for additional supply from OPEC+ in the coming months.
Other uncertainties in EIA’s oil price forecasts include existing sanctions on Russia, Iran, and Venezuela, which also could affect oil prices.
Gasoline prices
EIA forecasts the US retail price for regular-grade gasoline to average about US$3.10/gal. this summer, mostly because of expected lower crude oil prices. If the forecast holds, this price would be the lowest inflation-adjusted summer average gasoline price since 2020.
US propane markets
Among energy products, EIA expects China’s retaliatory tariffs on US goods will have the largest effect on propane because China is typically a major importer of US propane. Some propane previously exported to China will likely find new destinations, but EIA expects that reduced propane export demand will cause propane inventories on the US Gulf Coast to rise and put downward pressure on the Mt. Belvieu propane spot price.
Natural gas demand
EIA expects US natural gas demand to grow by 4% in 2025, averaging just over 115 billion ft3/d. This increase is led by a 18% increase in exports and a 9% increase in residential and commercial consumption for space heating. The increase in natural gas exports is driven primarily by growth in liquefied natural gas (LNG) exports as two new LNG export facilities – Plaquemines Phase 1 and Golden Pass LNG – ramp up operations. Although China announced on 7 April that it would no longer import US LNG, EIA expects that ample global demand for LNG and flexible destination clauses in US LNG contracts mean US LNG exports will be largely unaffected by recent trade policy developments.
Natural gas inventories and prices
US working natural gas inventories ended the withdrawal season 6% below the five-year average because cold weather in January and February resulted in more natural gas than average being withdrawn from storage. EIA continues to expect higher natural gas prices this year, with the Henry Hub price averaging about US$4.30/million Btu in 2025, up US$2.10/million Btu from 2024. EIA expects the annual average price to increase in 2026 to about US$4.60/million Btu.
Trade policy assumptions
The US macroeconomic outlook used in the STEO is based on S&P Global’s macroeconomic model. Although that model was released in mid-March and does not completely reflect the trade policies announced the first week of April, its assumptions are partly in line with what the President announced on 2 April. S&P Global’s forecast assumes an increasing universal tariff that will reach 10% by the end of 2025 and a higher rate on US imports from China. The EIA use Oxford Economics for its global GDP forecast, which was also completed in mid-March, prior to the most recent tariff announcements.
The full April 2025 ‘Short-Term Energy Outlook’ is available on the EIA website.