- Global oil demand growth for 2025 is revised down to 730,000 bpd — the slowest pace since 2020 — due to escalating trade tensions and weakening consumption in key economies like the U.S. and China.
- Oil supply is set to outpace demand, with non-OPEC+ countries boosting production, creating a projected surplus of 950,000 bpd for the year.
- OPEC+ plans to gradually ease voluntary production cuts, though the IEA still forecasts a comfortably supplied market through 2025.
The International Energy Agency (IEA) has released its April 2025 Oil Market Report, highlighting a significant slowdown in global oil demand growth and an anticipated supply surplus. These developments are primarily attributed to escalating trade tensions and structural shifts in energy consumption patterns.
Slowing Demand Growth Amid Trade Disputes
The IEA has revised its 2025 global oil demand growth forecast downward to 730,000 barrels per day (bpd), marking the slowest pace since 2020. This adjustment reflects the impact of intensified trade tensions, particularly stemming from U.S. tariff policies and subsequent retaliatory measures by China. The agency notes that weakening demand in both the United States and China accounts for half of the downgrade, with Asian export-driven economies also experiencing adverse effects.
Supply Surplus and Price Volatility
Despite the deceleration in demand, global oil supply is projected to rise by 1.3 million bpd in 2025, led by non-OPEC+ producers such as the United States, Brazil, and Canada. This increase is expected to result in a supply surplus of approximately 950,000 bpd, exerting downward pressure on oil prices. Indeed, oil prices have already declined by 13% in April, with Brent crude trading around $64 per barrel.
OPEC+ Production Adjustments
In response to the evolving market dynamics, OPEC+ has announced plans to ease its voluntary production cuts starting in April. However, the IEA cautions that even with these adjustments, the market is expected to remain comfortably supplied throughout 2025. The agency estimates that if OPEC+ maintains its current output quotas, the oil supply overhang could rise to 1.4 million bpd.
Outlook and Implications
The IEA’s latest report underscores the challenges facing the global oil market, including subdued demand growth and potential oversupply. These factors are likely to influence investment decisions and strategic planning within the energy sector. The agency emphasizes the need for careful monitoring of geopolitical developments and economic indicators to navigate the uncertainties ahead.
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Source: IEA
