Global oil demand growth is projected to slow to one of its weakest rates since 2001, according to new research from S&P Global. The firm also downgraded its forecast for benchmark crude prices, predicting West Texas Intermediate (WTI) could trade as low as the upper $40-per-barrel range for the remainder of the year.
S&P Global’s latest report, released Monday, highlights a sharper-than-expected year-on-year decline in U.S. oil production. This downturn is driven partly by subdued demand growth—levels not seen since the financial crisis of 2008-09 and the 2020 COVID-19 pandemic. The firm now expects WTI prices to fluctuate between the upper $40s and low $60s per barrel.
Jim Burkhard, S&P’s global head of crude oil research, warned, “The oil price is currently defenceless. While seasonal demand during the Northern Hemisphere summer may temporarily mask the issue, the market risks oversupply unless production trends change.”
For Canada, this forecast offers some relief. U.S. shale production, known for its sensitivity to price shifts, is expected to bear the brunt of market oversupply pressures. In contrast, Canadian, Guyanese, and Brazilian oil supplies tend to be less reactive to price fluctuations.
S&P forecasts U.S. oil output could fall by as much as 640,000 barrels per day by the end of 2026 compared to mid-2025 levels. This decline, while significant, could eventually pave the way for price stabilization and recovery.
Meanwhile, Canada’s energy sector faces mixed signals. April saw the country post a record $7.1-billion merchandise trade deficit, driven by a sharp drop in exports to the U.S., which declined 15.7% from March, according to Statistics Canada. The export slump was particularly pronounced in autos, consumer goods, and crude oil.
Industry analysts urge caution in interpreting the April crude export numbers. Susan Bell, senior vice-president of downstream research at Rystad Energy, noted that first-quarter exports were unusually high due to a rush to move goods ahead of new U.S. tariffs. Additionally, April traditionally marks a low production period in Canada due to seasonal maintenance shutdowns.
Kevin Birn, S&P’s chief analyst for Canadian oil markets, explained, “April is peak turnaround season when production is reduced for facility maintenance. The difference between production in turnaround season and winter can be as much as 300,000 barrels per day. We expect volumes to rebound, but prices are likely to remain weaker through year-end.”
Birn attributes the expected price weakness to multiple factors, including OPEC’s increased output and weakening global economic growth, both contributing to oversupply and downward price pressure that will impact Canadian oil exports.
Conversely, Rystad Energy projects a modest price increase during the summer months. Bell added, “Even if OPEC follows through with planned production increases, the market has capacity to absorb the additional barrels.”
Despite price volatility, S&P expects continued growth in Western Canadian production, with export volumes to the U.S. set to hit record highs. This trend is supported by efficiency improvements in oil sands operations and the existing infrastructure, with 90% of pipelines from Western Canada directed south to U.S. markets.
Birn emphasized, “The largest consumer of Canadian heavy sour crude remains the U.S. Midwest and Gulf Coast refiners, whose facilities are configured specifically to process this type of crude. These buyers will continue to source from Canada, ensuring steady export demand.”
In summary, while global oil demand and prices face downward pressures, Canada’s oil sector is positioned to maintain resilience, benefiting from stable U.S. demand and ongoing operational efficiencies amid a shifting market landscape.
