Gas prices will fall in the next 2 years as global oil supply outpaces demand, EIA says

Hurricane Milton has forced many Tampa-area residents to evacuate, leaving residents to scramble for limited gas.

US drivers could get some relief at the pump in the next two years as oil supply surpasses global demand, according to the US Energy Information Administration.

The agency said US gasoline prices will likely fall to $3.20 per gallon this year, marking a decrease of more than 10 cents per gallon from last year. In 2026, prices at the pump will fall further, to an annual average of $3.00 per gallon, the EIA said.

The lower gas prices largely reflect the agency’s forecasts for lower crude oil prices amid a widening gap between oil supply and demand.

The EIA forecasts Brent crude will fall 8% to an average of $74 per barrel in 2025 and 11% to $66 per barrel next year as the global oil glut expands.

“We expect downward oil price pressures over much of the next two years, as we expect that global oil production will grow more than global oil demand,” the agency said in its short-term energy outlook, published Tuesday.

The agency sees global oil production growing in 2025 and 2026, helped by the unwinding of OPEC+ production cuts that started in 2022.

The group has delayed unwinding the cuts several times, pushing a gradual series of hikes from an initial October 2024 start to April of this year. The unwinding is expected to last until the end of 2026.

There will also be strong growth in oil production in general, including in the US’s oil-rich Permian region, the agency said. It projects the region’s share of US production will grow to account for over half of all US crude oil production in 2026.

Meanwhile, as oil production grows, demand will grow but less rapidly, and continue to remain below pre-pandemic levels. Much of the projected growth in oil consumption will come from Asia, where India is now the leading source of global oil demand in the EIA’s forecast.

The mismatch in global supply and demand will make for a 300,000 barrels per day surplus this year, which will more than double to 800,000 barrels per day in 2026, the agency says.

The agency acknowledges that its forecast was completed before the Biden administration issued additional sanctions targeting Russia’s oil sector last week, which could reduce Russia’s oil exports to the global market.