The global energy market is undergoing significant shifts as consumption, production, and prices of oil, natural gas, and electricity evolve. These changes are driven by a complex web of factors including geopolitical risks, climate-driven demand surges, production dynamics, and the continued rise of renewable energy sources. Understanding these trends is critical for businesses involved in energy procurement, logistics, and supply chain management. At Gain Consulting, we are committed to providing actionable insights that help companies navigate the changing energy landscape and optimize their supply chains for the future.
In this blog, we will explore the key trends shaping global oil consumption, natural gas production and pricing, and U.S. electricity generation, and how these factors will impact energy markets in 2024 and beyond.
India Driving Global Oil Consumption Growth
In the global oil market, one of the most significant developments over the next two years is the rise of India as the leading source of growth in global oil consumption. Over 2024 and 2025, India is projected to account for a remarkable 25% of total oil consumption growth globally. This is a sharp reflection of India’s expanding economy, rising middle class, and increasing demand for energy in both transportation and industry.
In 2024, we expect global oil consumption to increase by approximately 1.0 million barrels per day (b/d), with even stronger growth anticipated in 2025, with consumption rising by 1.2 million b/d. India’s burgeoning demand will play a pivotal role in driving these increases. The country’s growing infrastructure, urbanization, and industrial development require vast amounts of energy, and oil remains a key part of the energy mix.
For businesses in sectors like manufacturing, transportation, and energy procurement, the growth in global oil consumption—particularly from India—suggests that energy demands in key markets will continue to rise. Companies involved in global supply chains should keep a close eye on this development, especially as it may influence energy pricing and availability in the coming years.
Oil Prices and Global Inventories: A Geopolitical Balancing Act
As we move into 2025, geopolitical risks and OPEC+ production cuts are expected to put upward pressure on oil prices. Currently, oil inventories are being drawn down due to these production cuts, which means oil prices are expected to remain relatively high in the near term. We forecast that the Brent crude oil price will average around $78 per barrel in the first quarter of 2025 (1Q25).
However, starting in the second quarter of 2025 (2Q25), global oil production growth is expected to outpace consumption, leading to an increase in oil inventories. This increase in supply is likely to reduce upward pressure on prices, and we anticipate that Brent crude prices will drop to an average of $74 per barrel in the latter half of 2025.
This price trend is important for companies that rely heavily on fuel costs, including those in transportation, manufacturing, and logistics. The fluctuation in oil prices can have a significant impact on operational expenses and energy procurement strategies. Companies that are prepared to adapt to potential price swings and incorporate flexibility into their contracts with suppliers will be better positioned to manage costs and mitigate risk.
Natural Gas: Price Trends and Production Outlook
Natural gas prices have been on a rollercoaster in recent months. After dropping to a low of $2.20 per million British thermal units (MMBtu) in October 2024, natural gas prices have remained volatile. Much of this price fluctuation has been driven by mild weather that delayed the start of natural gas withdrawals from storage.
Looking ahead, however, we expect Henry Hub natural gas prices to rise as we move into the winter months. Prices are forecast to average around $2.80/MMBtu in 1Q25, following the typical seasonal patterns of higher demand during colder months. The resurgence in prices can be attributed to the increase in global demand for U.S. liquefied natural gas (LNG) exports, which has placed upward pressure on domestic natural gas prices. We expect Henry Hub prices to average $2.90/MMBtu in 2025 as the U.S. continues to export more LNG to meet growing global demand.
For companies involved in natural gas procurement, it’s crucial to monitor both domestic and international markets. The U.S. is poised to become an even more significant player in the global natural gas market, and businesses with supply chains dependent on natural gas should consider securing long-term contracts or diversifying supply sources to mitigate the risk of price volatility.
U.S. Natural Gas Production: Steady Growth Amid Price Pressures
U.S. marketed natural gas production is expected to average 113 billion cubic feet per day (Bcf/d) in 2024, which represents little change from 2023. This marks a shift from the previous three years of production growth, as lower natural gas prices in 2023 curbed production in certain regions.
However, in 2025, U.S. natural gas production is expected to increase by 1%, reaching an average of 114 Bcf/d, driven largely by a 6% increase in production from the Permian Basin. The Permian Basin’s growth highlights the continued importance of this region for U.S. natural gas output and underscores the need for companies to stay informed on regional production trends that may impact their energy procurement strategies.
For businesses, understanding these regional dynamics is critical, as fluctuations in natural gas availability or prices can affect everything from manufacturing costs to transportation expenses. Companies should be prepared for the potential changes in the energy landscape, including the opportunity to leverage emerging supply sources in growing production regions.
U.S. Electricity Generation: Natural Gas and Solar Power Lead the Way
In the United States, electricity generation is expected to grow by 3% in 2024, largely driven by increased air-conditioning demand due to hotter-than-usual summer temperatures. As a result, electricity consumption is forecast to increase, with natural gas and solar power supplying most of the additional demand.
Natural gas consumption for electricity generation is expected to grow by 3%, accounting for a significant portion of the rise in demand. With natural gas prices remaining relatively stable in 2024, utilities are likely to continue relying on this resource to meet peak electricity demand.
Solar power is another major contributor to the increase in U.S. electricity generation. Solar generation is expected to increase by 34% in 2024, as the country continues to expand its solar generating capacity. This growth in solar power generation is expected to continue into 2025, with solar generation forecast to increase by another 31% as the U.S. continues to make strides toward a cleaner energy mix.
For companies involved in energy-intensive industries, the continued growth of renewable energy sources, especially solar power, offers opportunities for more sustainable energy procurement. Companies may consider exploring power purchase agreements (PPAs) or other green energy options to meet sustainability goals and take advantage of renewable energy incentives.
Key Takeaways for Businesses in Energy Procurement
As we move into 2025, the global energy market will be shaped by several key trends:
Oil consumption will continue to grow, with India playing a critical role in driving global demand. Businesses in the manufacturing, transportation, and energy sectors should prepare for potential price fluctuations and supply chain disruptions.
Oil prices are expected to rise in the near term due to geopolitical risks and OPEC+ production cuts, but will likely stabilize as global oil production increases in mid-2025.
Natural gas prices will rise seasonally but are expected to remain relatively stable in the long term, driven by increasing global demand for U.S. LNG exports.
Electricity generation in the U.S. will continue to rely heavily on natural gas, while renewable sources like solar power will play an increasingly larger role in meeting growing demand.
At Gain Consulting, we provide strategic guidance to help companies navigate the complexities of the global energy market. Whether you are managing energy procurement, logistics, or sustainability initiatives, our team can help you develop strategies to optimize your supply chain in an increasingly dynamic energy landscape. Contact us today to learn how we can help your business thrive amid these changes.
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