IEA Forecasts Oil Supply Surplus Amid Lower Demand Growth Projections

The International Energy Agency (IEA) has projected that global oil supply could exceed demand by approximately 600,000 barrels per day (bpd) in 2025, according to its latest monthly oil market report released on Thursday. This revision follows a downward adjustment in its 2025 oil demand growth forecast.

The surplus could increase by an additional 400,000 bpd if the OPEC+ alliance proceeds with its planned unwinding of production cuts and fails to curb overproduction by member states, the Paris-based agency noted.

The IEA’s February report had indicated a slightly smaller surplus of around 500,000 bpd, according to Reuters calculations. The latest figures signal the challenges OPEC+ faces in managing global oil markets amid growing economic uncertainties.

Revised Demand Growth Forecast

The IEA lowered its 2025 oil demand growth forecast by 70,000 bpd to approximately 1 million bpd, attributing most of this growth to Asia, particularly China’s petrochemical sector.

The agency cited macroeconomic deterioration as a key factor, noting that escalating trade tensions between the United States and multiple countries have dampened economic outlooks. As a result, the IEA also revised down demand growth estimates for the fourth quarter of 2024 and the first quarter of 2025.

Following the report’s release, Brent crude oil prices dipped, trading at $70.85 per barrel at 12:26 p.m. Saudi time, compared to $71.01 per barrel just before publication.

Supply Growth and OPEC+ Challenges

On the supply side, the IEA predicts that global oil supply growth will double in 2025, reaching 1.5 million bpd, assuming that OPEC+ maintains its current production cut levels beyond April.

While OPEC+ had planned to increase production from Saudi Arabia and Algeria by 138,000 bpd starting in April, the IEA suggests that actual supply increases will be much smaller. Continued overproduction from other OPEC+ member states leaves little room for additional production increases, with the agency estimating that OPEC’s net supply boost may only be around 40,000 bpd.

Outlook for the Oil Market

The IEA’s latest report underscores growing uncertainties in the global oil market, as supply growth remains strong while trade tensions and economic headwinds slow demand expansion. The report highlights the delicate balancing act OPEC+ faces in stabilizing oil prices while managing compliance issues within the cartel.

With supply continuing to rise and demand projections weakening, analysts suggest that OPEC+ may need to reassess its production strategy in the coming months to prevent a prolonged market surplus.