The Future of Brent Oil Remains Clouded as US Production Slows and Geopolitical Tensions Take Hold

US Energy Information Administration (EIA) forecasts suggest the United States’ crude oil production is set to decline over the coming 18 months as producers scale back on drilling activity in response to lower prices.

The geopolitical landscape had cast a positive outlook for crude oil prices in the build-up to the EIA’s data release, owing to positive signs in trade talks between the US and China. However, optimism has since been challenged by growing tensions involving the United States and Iran, pushing Brent oil into more uncertain territory.

Given the many different factors at play, Brent crude oil has begun a period of consolidation after reaching a high of $70.73, ranging between $64 and $68. Whether Brent reclaims its lost ground or triggers further downside toward the 50% Fibonacci level over the coming days will carry significant implications regarding the confidence of investors in Trump’s influence over global energy.

These recent ranges fall in line with J.P. Morgan’s April forecasts for Brent oil, which is expected to weigh in at $66/bbl for 2025 before falling to $58/bbl for 2026. Despite the future of US trade impacting other industry outlooks, the investment bank opted to maintain its projections.

US Oil Production to Decline

In its Short-Term Energy Outlook, the EIA estimated that US output would decline by 50,000 b/d year-on-year by 2026 to 13.37 million b/d. Should they become a reality, it would represent the first annual decline in output from the United States since the pandemic impacted production in 2021.

Given that J.P. Morgan’s Brent oil forecasts place its value for 2025 around 42% below its peak value in the wake of Russia’s war in Ukraine in 2022, we can expect further downward revisions in US crude oil estimates for 2026.

Meanwhile, output growth for 2025 was left unchanged at 210k b/d YoY. The decline isn’t too surprising, given the recent slowdown in drilling activity. The low-price environment has seen the rig count fall by 33 over the last six weeks to 442, the lowest since October 2021. Given our view that oil prices will be lower towards the end of this year, there’s scope for further downward revisions in US crude oil output estimates for next year.

Despite this, investors should bear in mind that this outlook could change significantly should President Trump’s resumption of reciprocal tariffs lead to fresh trade tensions following the end of their 90-day delay in July.

Geopolitical Uncertainty

While expectations for Brent oil are forecasting a downward trend over time, crude oil futures climbed more than 4% on Wednesday, June 11, 2025, as President Trump expressed his doubt over whether the US and Iran would reach a nuclear deal.

The implications regarding the demand for oil during geopolitical conflicts mean that speculative traders can increase their bets on Brent at the prospect of escalating tensions. The news that the US is preparing to evacuate all non-essential personnel from its embassy in Baghdad fueled further bets on crude oil.

Despite a spike in demand, Brent oil futures cooled off quickly, with futures for August and July both fractionally falling.

Measuring the Clean Transition

Other investors may be becoming increasingly wary of clean energy initiatives and their impact on natural fuel.

IEA figures suggest that clean energy investments, totalling $2.2 trillion in 2025, will be double the amount going into oil, gas, and coal.

These record-breaking investment figures on a global scale focus on renewable energy, nuclear, grids, storage, low-emission fuels, efficiency, and global electrification projects.

Taking the lion’s share of green energy investments in 2025 is expected to be solar power, with utility-scale and rooftop installations helping to account for $450 billion of investment this year alone.

Given consumer appetite for environmentally conscious companies, of which 76% suggest they would abandon a firm that treated the environment poorly, we may see green initiatives continue to increase as businesses seek to avoid customer churn.

Although President Trump is famously skeptical toward climate change, much of the clean transition will be accelerated in Southeast Asia, with China, South Korea, and Japan all showing their interest in renewable energy projects.

According to a report released on May 20, the number of international investment projects for renewable energy among the Association of Southeast Asian Nations, or ASEAN, has increased by an average of around 15% per year since 2020.

Implications for Brent Oil

With cooling outlooks for Brent oil over the years ahead, it’s clear that investors have already long factored in the prospect of slower production and global clean energy initiatives. However, rising geopolitical tensions in recent years have seen the price of oil reach new all-time highs.

This could mean that there are still plenty of trading opportunities to be found in natural energy markets, and adopting a more responsive approach to the rolling news feeds generated by President Trump can pave the way for price fluctuations that may benefit investors from anticipating.

The long-term outlook for Brent oil remains uncertain, but there appear to be plenty of opportunities to trade in the volatility over the foreseeable future.