IEA Raises Oil Demand Forecast for 2025

Forex - The International Energy Agency (IEA) has raised its oil demand forecasts for next year citing the impact of China's stimulus measures, but noted that growth rates are expected to remain low.
The Paris-based organization projects global demand, previously estimated at 990,000 barrels per day, will increase by 1.1 million barrels per day by 2025. However, forecasts for this year have been significantly reduced from 921,000 barrels per day to 840,000 barrels per day due to lower-than-expected deliveries in China, Saudi Arabia, and Indonesia.
Both forecasts are considerably lower than last year’s growth rate of over 2 million barrels per day, reflecting a weak macroeconomic environment and shifts in oil consumption. The agency's predictions are also significantly below those of OPEC, which sees demand increases this year at strong levels of 1.61 million barrels per day and 1.45 million barrels per day next year.
The IEA stated, “The biggest question for 2025 continues to be global oil demand. This year's sudden halt in growth for China's oil demand and sharp declines in other major emerging and developing economies have tilted consensus towards a softer outlook.”
Total global demand is expected to average 102.8 million barrels per day this year and 103.9 million barrels per day next year.
The IEA mentioned that despite the significant potential reduction in excess due to the OPEC and allies’ decision to postpone production increases, the current market balance still indicates a supply surplus of 950,000 barrels per day next year. If OPEC+ begins to ease voluntary cuts as planned from the end of March, the production excess could rise to 1.4 million barrels per day.
Last week, OPEC and its allies extended voluntary production cuts of 2.2 million barrels per day through the end of March and producers are now preparing to ease these cuts over an 18-month period.
The IEA report comes during a time when oil prices continue to come under pressure due to weak demand trends in China and concerns about an oversupply in the market next year. However, the chaos in the Middle East following the fall of Syrian President Bashar al-Assad and China's pledge to increase stimulus provided some support this week. Brent crude is currently trading around $73 per barrel, while the U.S. benchmark West Texas Intermediate is around $70 per barrel.
Meanwhile, the IEA reported that global oil supply increased by 130,000 barrels per day in November due to a continued recovery in Libya and Kazakhstan production. Total supply is expected to average 102.9 million barrels per day this year and 104.8 million barrels per day next year.
Production from non-OPEC+ countries decreased last month due to seasonally weak Brazilian biofuel production and the impact of hurricanes in the U.S. Gulf of Mexico, but overall supply growth is projected at 1.5 million barrels per day for both 2024 and 2025.
Oil supply from OPEC+ member countries rose by 310,000 barrels per day in November to 41.4 million barrels, supported by Libya's return to the market. According to IEA estimates, the production of 18 OPEC+ members subject to production quotas exceeded their implicit targets by 680,000 barrels per day, primarily due to Kazakhstan's influence.