RIYADH: The International Energy Agency has reduced its forecast for global oil demand growth in 2025, warning that a slowing global economy and escalating trade tensions are weighing heavily on consumption.
In its monthly oil market report, released on Tuesday, the Paris-based agency reduced its 2025 demand growth prediction by 300,000 barrels per day to 730,000 bpd. The IEA anticipates the slowdown to continue until 2026, when demand is expected to climb by only 690,000 bpd—one of the weakest rates seen in recent years.
The decline follows a solid first quarter in which global oil demand increased by 1.2 million bpd, the quickest rate since 2023.
However, this impetus is projected to dissipate amid a more unstable economic backdrop, particularly in advanced economies where industrial production and freight transit remain constrained.
At the same time, oil prices have plummeted in recent weeks, indicating mounting fears about excess and weak demand.
Brent crude, the international standard, has declined by almost $10 per barrel since March, reaching $65 and briefly sliding below $60 earlier this month—the lowest level since 2021.
According to the IEA, crude output in nine main OPEC+ countries increased by 60,000 bpd in March to 21.94 million bpd, exceeding the group’s agreed-upon objective by 830,000 bpd. Saudi Arabia, which has led efforts to reduce supply, increased output slightly to 9.01 million bpd, just above its aim of 8.96 million bpd. The Kingdom holds the group’s greatest spare capacity, with the ability to increase output by more than 3 million bpd if necessary.
Other big producers, including Iraq, the UAE, and Kuwait, all exceeded their quotas. Iraq produced 4.32 million bpd in March, exceeding the target of 3.88 million bpd. The UAE exceeded its production target by 350,000 bpd, while Kuwait overproduced by 100,000 bpd. Nigeria was the only major member to fall short of its aim, producing 1.4 million bpd (just shy of its 1.5 million bpd allotment) despite continued operational and security issues.
Global oil stockpiles increased by 21.9 million barrels in February, reaching 7.65 billion barrels, indicating more market weakness. Crude and feedstock stockpiles rose by more than 41 million barrels, but refined product inventories declined by 19.2 million barrels, owing to withdrawals in OECD countries.
In March, refining margins deteriorated, particularly in the Atlantic Basin, where cracks for middle distillates narrowed. In response, the IEA reduced its 2025 prediction for global oil throughput by 230,000 bpd, with refiners expected to process 83.2 million bpd this year. A small increase to 83.6 million bpd is predicted for 2026.
Despite OPEC+’s plans to raise output objectives by 411,000 bpd in May, the IEA warned that any actual increase could be tempered by existing overproduction and uneven compliance with quotas. It also reduced its expectation for non-OPEC+ supply increase in 2025 by 260,000 bpd, to 1.2 million bpd.
With mounting economic uncertainties, tumultuous geopolitics, and uncertain production strategy all at play, the global oil market faces a chaotic future.