- The International Energy Agency (IEA) has projected the oil market’s trajectory for 2025.
- Global oil demand is expected to grow by 1.1 million barrels per day (mbd) next year, slightly below the 1.2 mbd expected in 2024.
- Despite the increasing adoption of clean energy technologies, the projected growth in demand for 2025 remains reasonably robust, led by non-OECD countries, although China’s share is expected to decline significantly.
- On the supply side, continued robust gains in non-OPEC production are anticipated, led by the US, Brazil, Guyana, and Canada.
- The refining landscape is also set for changes, with higher-cost operators feeling the pressure.
The IEA forecasts a 1.1 million barrels per day (mbd) increase in global oil demand for 2025, just below the 1.2 mbd expected in 2024. Despite the accelerating adoption of clean energy technologies, the growth in demand remains robust, in line with average growth rates seen since 2011. The demand growth is expected to be led by non-OECD countries, with China’s share of the total increase declining significantly due to the rapid domestic uptake of electric vehicles and high-speed rail. India, other developing Asian economies, and the Middle East are expected to experience strong demand growth next year. Total OECD demand is expected to see just a marginal drop, with the decline in European consumption notably decelerating as economic conditions improve.
Supply Side
The IEA anticipates continued robust gains in non-OPEC production, with the US, Brazil, Guyana, and Canada leading the way. The US will again be the largest contributor, although growth rates will continue to slow. Total non-OPEC supply is forecast to rise by 1.4 mbd in 2025, outstripping the increase in oil demand. This indicates an even smaller call on OPEC+ supply and highlights the risk of extended OPEC+ production constraint.
Refining Landscape
The refining landscape is expected to see further changes in 2025, with higher-cost operators feeling the pressure. European crude refining runs are projected to decline by 300 kbd due to announced capacity closures at the Grangemouth and Wesseling plants. LyondellBasell also plans to close its 260 kbd Houston refinery by spring 2025. Mexico’s 340 kbd Olmeca refinery, intended to meet domestic demand, is anticipated to start operating in 2025. The IEA also projects a 300 kbd gain in Africa’s throughput in 2024 and another 300 kbd in 2025 as the 650kbd Dangote plant ramps up operations.
Tanker Market Outlook
The IEA’s 2025 projections for the tanker market offer a mixed bag of news. The crude segment is largely positive, considering increases in oil supply in the Americas and rising demand in the East. However, for the product tanker market, the outlook is not as clear-cut. The anticipated decline in European crude throughput will support incremental import demand but will be more than offset by declining imports into West Africa and Mexico.
Regional Tanker Market Analysis
Owners in position in the Northern Aframax market started the week well and as local units were trimmed from the list, rates in the region climbed significantly. However, this was short-lived as relets began once more to drop the market looking for short-term employment from their own program. As a result, the North market closed at ws 142.5 for an XNSea voyage. Looking ahead to next week, rates are expected to be tested further, as with the USG market still coming off, many owners might decide to stay in the region lengthening the list.
Clean Products Market
In the Mediterranean, the Handies market saw a rollercoaster week, starting at a bottomed 30,000mt x ws 200 level, pushing the ws 300 barrier and beyond. The real catalyst was a handful of stems off similar windows in the East Med region. Rates reached around the 30,000mt x ws 330 region, but it is felt that they have probably capped out at the ws 300 mark.
Dirty Products Market
Activity got off to a fast start in the North Handy market, with plenty of fixtures reported, leaving the region feeling tighter for the week’s balance. However, the pace of activity soon slowed down and with the repetition of ws 235, sentiment has remained steady in the region. In the Med, there was a sluggish feel to the sector as enquiry took a breather, ending the momentum that was starting to build, with numerous repetitions of ws 170 leaving sentiment steady.
