Price swings ripple through North American oil markets

Benchmark oil prices shifted lower in April/May 2025 as US tariffs and OPEC+ policy caused seismic shifts in global supply/demand expectations. In June, escalated conflicts in the Middle East threatened large sources of crude supply and spurred temporary price spikes. However, prices returned to lower levels by late June as a ceasefire alleviated supply concerns.

The recent price swings highlight the volatility that has defined oil markets through 2025. Our global fundamental outlooks imply that lower prices will persist through 2026, especially in a scenario where Iran/Israel tensions ease and supply remains undisrupted. In a recent monthly outlook, we discussed our expectations that Brent will come under pressure in H2 2025 due to weaker global fundamentals, with lower outright prices cascading throughout North America and abroad.

Read on for a detailed analysis of how these price changes will affect North American crude supply, exports, and infrastructure investments.

Impacts of a lower price environment

We continue re-assessing these views on a monthly basis – including upside price risk introduced by geopolitical events. Assuming an Iran/Israel ceasefire remains in place, we expect lower oil prices will have sweeping impacts across the North American crude value chain.

WTI prices: An accelerated increase in OPEC+ production this year contributes to a significant global oversupply in late 2025 and early 2026, resulting in weaker prices. Lower Brent prices cascade to WTI and other outright North American crude prices.

Lower 48 supply: Anticipated rig count declines for onshore US Lower 48 in the second half of 2025 (driven by lower prices) are likely to pressure production volumes in 2026. We expect the downward trend in rig activity to persist through the remainder of the year, driven primarily by continued weakness in oil prices and a more conservative capital approach among operators.

US exports: Suppressed US supply – along with weakened global demand outlooks amid US tariffs – translates to a softer forecast for US crude exports. We now expect US exports to largely plateau through 2026. Although, with higher prices, eventual growth through the decade remains possible. Various tariff policy scenarios also introduce significant risk for crude trade between the US and international markets.

Pipeline and coastal investments: A softer Lower 48/Permian supply outlook weakens the immediate case for US crude infrastructure investments, especially Permian pipeline expansions and Gulf Coast export terminal projects. Several offshore export terminals have been proposed to facilitate US export growth. While we currently include the SPOT terminal in our base case assumptions, weakening Lower 48 supply heightens the risk that no offshore export terminal reaches FID. A shifting investment landscape could have minimal impact in the near-term but could lead to market constraints if Permian/Lower 48 supply resumes a growth pattern.

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