IEA Revises 2025 Global Oil Demand Growth Upward, Highlights Lingering Market Weakness

Key Insights

• The International Energy Agency (IEA) has increased its forecast for 2025 oil demand growth, primarily fueled by emerging Asian economies, yet overall demand remains subdued.
• This revision follows OPEC+’s decision to extend production cuts through March.
• The IEA warns that ending these cuts could exacerbate the current global oil surplus.

The IEA’s latest outlook highlights a rise in global oil demand by 1.1 million barrels per day (b/d) for 2025, an upward adjustment from the previous estimate of just under 1 million b/d. Despite this optimistic revision, demand softness persists, particularly due to China’s economic slowdown impacting its oil consumption significantly.

For 2024, the agency has lowered its demand growth forecast to 840,000 b/d from an earlier projection of approximately 920,000 b/d, reflecting ongoing market uncertainties.

OPEC+ Production Cuts Influence Market Dynamics

Following the recent announcement by OPEC+ to maintain voluntary output reductions of 2.2 million b/d until the end of March, the IEA notes that persistent overproduction by some members, combined with strong supply growth from non-OPEC+ countries and modest global demand growth, continues to pressure the market with a supply glut.

If OPEC+ reverses these production cuts after March, the IEA forecasts an increased surplus of around 1.4 million b/d, potentially intensifying market imbalances.

"While geopolitical tensions and OPEC+ supply strategies remain under close scrutiny, the principal uncertainty for 2025 centers on global oil demand," the IEA stated. The abrupt slowdown in Chinese oil demand and slower growth in other emerging markets have shifted consensus toward a more cautious outlook.

As of Thursday, Brent crude futures remain steady at $73.51 per barrel, with West Texas Intermediate futures holding near $70.28 per barrel, reflecting market anticipation amid these evolving factors.

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