The International Energy Agency raised its 2025 oil demand forecast by 100,000 b/d on Dec. 12 on expectations of stronger growth in China and the US, but said supplies will still outstrip demand even if OPEC+ retains its current output curbs.
Global oil demand growth is now projected to moderately accelerate in 2025, growing from 840,000 b/d in 2024 to 1.1 million b/d in 2025, largely driven by expected economic recovery and stimulus measures in China and anticipated economic growth in the US. Total oil demand in 2025 is forecast at 103.9 million b/d, the IEA said in its latest monthly Oil Market Report.
However, the IEA revised its growth estimates for 2024 downward, reducing them by 80,000 b/d from previous forecasts, largely due to weaker-than-expected deliveries in China, Saudi Arabia, and Indonesia.
The IEA said it still expects an oversupplied oil market next year, even if OPEC+ continues to delay the unwinding of its additional voluntary production cuts.
OPEC agreed with its non-OPEC allies on Dec. 5 to delay easing 2.2 million b/d of voluntary production cuts until April. A further 3.6 million b/d of groupwide cuts were extended by a year until the end of 2026.
“The latest OPEC+ decision does not remove the uncertainty about when the unwinding of the cuts will actually start,” the IEA said. “In this context, our forecasts exclude a return to higher production quotas until a final phase-out timeline is confirmed.”
“Persistent overproduction from some OPEC+ members, robust supply growth from non-OPEC+ countries and relatively modest global oil demand growth leaves the market looking comfortably supplied in 2025,” the IEA said.
OPEC gap
Assuming OPEC+ continues to retain its current output quotas, the IEA said it estimates the market balances next year will see a 950,000 b/d supply overhang.
Even in the absence of the unwinding of OPEC+ cuts, the IEA said the total oil supply is on track to increase by 630,000 b/d this year and 1.9 million b/d in 2025, to 104.8 million b/d. As a result, if OPEC+ does begin unwinding the voluntary cuts from the end of March 2025, the oil supply overhang would rise to 1.4 million b/d.
The IEA estimated that non-OPEC+ oil supply alone will rise by about 1.5 mb/d in both 2024 and 2025, led by the US, Brazil, Guyana, Canada and Argentina.
The IEA report comes a day after OPEC revised its forecast for global oil demand growth in 2025 downward for the fifth consecutive month, narrowing the gap between the demand forecasts of these two oil market watchers. OPEC expects global oil demand to grow by 1.4 million b/d in 2025, down by 90,000 b/d from its previous report.
The IEA also said global stocks fell 39.3 million barrels in October to the bottom of their five-year range. Led by an “exceptionally” sharp decline in oil products (82.3 million barrels), as lower refinery activity due to seasonal maintenance coincided with a rise in global oil demand, OECD commercial stocks fell in October, in line with the seasonal norm, falling to 2.78 billion barrels.
Source: Platts
