This report does not constitute a rating action.
Key takeaways
- We lowered our Brent and West Texas Intermediate(WTI) oil price assumptions by US$5 per barrel for the rest of 2025 on our view that the oil market could be oversupplied.
- Our assumptions per barrel for Brent and WTI remain the same for 2026 through 2028.
- Our assumptions for Henry Hub, AECO, and TTF remain unchanged for 2025-2028.
- At this time, we don't believe there will be many rating actions directly resulting from our price deck revisions for this year.
S&P Global Ratings has reviewed its hydrocarbon price decks and lowered its Brent and WTI oil price assumptions by $5 per barrel (bbl) for the remainder of 2025 to $65/bbl and $60/bbl respectively. We left assumptions for 2026-2028 unchanged.
| S&P Global Ratings' oil and natural gas price assumptions | ||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| New prices | Old prices | |||||||||||||||||||||
| WTI ($/bbl) | Brent ($/bbl) | Henry Hub ($/mmBtu) | AECO ($/mmBtu) | TTF ($/mmBtu) | WTI ($/bbl) | Brent ($/bbl) | Henry Hub ($/mmBtu) | AECO ($/mmBtu) | TTF ($/mmBtu) | |||||||||||||
| rest of 2025 | 60 | 65 | 3.75 | 1.75 | 14 | 65 | 70 | 3.75 | 1.75 | 14 | ||||||||||||
| 2026 | 65 | 70 | 4.25 | 2.5 | 12 | 65 | 70 | 4.25 | 2.5 | 12 | ||||||||||||
| 2027 | 65 | 70 | 4.25 | 2.75 | 10 | 65 | 70 | 4.25 | 2.75 | 10 | ||||||||||||
| 2028 and beyond | 65 | 70 | 4.25 | 2.75 | 10 | 65 | 70 | 4.25 | 2.75 | 10 | ||||||||||||
| bbl--Barrel. WTI--West Texas Intermediate. HH--Henry Hub. TTF--Title Transfer Facility. AECO--Alberta Energy Co. mmBtu--million Btu. Note: Prices are rounded to the nearest $5/bbl and 25 cents/mmBtu. Source: S&P Global Ratings. | ||||||||||||||||||||||
This revision supersedes our last oil price update published March 6, 2025. Context for our unchanged natural gas price assumptions can also be found in that article.
To calibrate the potential use of cash flow volatility adjustments and the resilience of the financial risk profile and ratings, we maintain a ratings midcycle price reference point to be used in our analysis of oil and gas producers. These midcycle prices are unchanged at $50/bbl of oil for WTI and $55/bbl for Brent and $2.75/$2.25/$8 per million Btu for natural gas prices as determined by Henry Hub(H), Canadian Alberta Energy Co.(AECO), and the Dutch Title Transfer(TTF), respectively.
We typically publish our price decks at least every quarter. We may also publish when, for example, there are significant changes to S&P Global Ratings Commodity Insights' forecasts or when the hydrocarbon futures curves persistently deviate by more than 20% from our published decks. Our corporate analysts use the first three years in their modelling, analysis, and determining of ratings for exploration and production companies.
For further information, see the revised version of "Credit FAQ: How S&P Global Ratings Formulates, Uses, And Reviews Commodity Price Assumptions," published April 20, 2023.
Based on the April 2, 2025, announcement of broad and material tariffs of at least 10% by the U.S., subsequent responses from various countries, and most recently a 90-day pause on most U.S.-imposed reciprocal tariffs (with the exception of tariffs on China), S&P Global believes economic and trade uncertainty will likely lower demand growth for oil. Crude oil market benchmarks and futures prices have fallen in response to both the tariff implementations and eight OPEC+ countries' announcement that they would increase output by 411,000 barrels per day (bpd) starting in May 2025, although partially rebounded on the announcement of the 90-day pause and remain volatile. Lower demand growth and increasing supply imply the oil market balances will lead to a greater supply surplus than we anticipated at the beginning of March.
Chart 2
Our revised prices factor in expectations of weaker global oil demand growth but also our assumption that a material adverse shift in demand expectations would result in less additional supply from OPEC+ given repeated statements that OPEC+ increases "may be paused or reversed subject to evolving market conditions." Furthermore, we estimate that oil prices at or below $60/bbl would likely delay new production growth and investment, especially from shorter-cycle onshore U.S. fields. Nonetheless, significant uncertainties remain including the enduring levels of tariffs, the consequences for oil demand, and the timing and materiality of any net supply adjustments by producing companies and countries.
Any further reintroduction of OPEC supply, beyond what has been announced for May, will likely exacerbate the global supply surplus this year.
In the context of an oversupplied market and surplus production capacity in the order of 5 million bbls/d, largely in Saudi Arabia, United Arab Emirates, and Kuwait, we believe moderate reported global inventory levels are the only significant supportive factor for the oil price outlook.
Chart 2
At this point, we have not made any changes to our Henry Hub, AECO, or TTF gas price assumptions, given our view that global natural gas supply/demand fundamentals remain supportive. For more information, see "S&P Global Ratings Revises Oil And Gas Price Assumptions On Uncertain Geopolitics And Market Fundamentals," published March 6, 2025.
| Primary Credit Analyst: | Simon Redmond, London + 44 20 7176 3683; simon.redmond@spglobal.com |
| Secondary Contacts: | Carin Dehne-Kiley, CFA, New York + 1 (212) 438 1092; carin.dehne-kiley@spglobal.com |
| Paul J O'Donnell, CFA, New York + 1 (212) 438 1068; paul.odonnell@spglobal.com | |
| Thomas A Watters, New York + 1 (212) 438 7818; thomas.watters@spglobal.com |
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