Global Oil Supply May Surpass Demand by Over 600,000 Barrels Per Day This Year
The International Energy Agency (IEA) has released a monthly oil market report indicating that global oil supply could exceed demand by approximately 600,000 barrels per day this year. This surplus is attributed to a downward revision in the agency’s 2025 demand growth forecast.
Downward Revision of 2025 Demand Growth Forecast
The IEA has revised down its 2025 oil demand growth forecast by 70,000 barrels per day (bpd) to around 1 million bpd. This reduction is largely driven by Asia, specifically China’s petrochemical industry. The data suggests that the global trade tensions could impact demand against a backdrop of robust supply growth.
OPEC+ Unwinding Output Cuts May Contribute to Further Surplus
The IEA has stated that if OPEC+ extends its unwinding of output cuts and fails to rein in overproduction against quotas, the surplus could grow by an additional 400,000 bpd. This would result in a significant increase in global oil supply, posing challenges for OPEC+ in balancing the oil market this year.
Impact on Oil Prices
The data highlights the task facing OPEC+ in managing the oil market. As trade tensions escalate between countries, including the US and others, the macroeconomic conditions that underpin oil demand projections have deteriorated. The IEA has revised down its demand growth estimates for the fourth quarter of 2024 and the first quarter of this year.
Supply Growth Expected to Double in 2025
On the supply side, the IEA expects global supply growth to double relative to the 2024 pace of growth, reaching around 1.5 million bpd in 2025. Assuming OPEC+ maintains cut levels after its planned April unwinding, this would result in a significant increase in global oil supply.
Potential Reduction in Oil Supply from OPEC
However, the IEA has noted that OPEC may only add around 40,000 bpd of oil to the market following its April cut unwinding due to continued overproduction from other member states. This reduction in potential oil supply could offset some of the surplus expected this year.
Conclusion
The IEA’s monthly oil market report highlights the complexities facing OPEC+ in balancing the global oil market. With a potential surplus of over 600,000 bpd and growing trade tensions, the agency has revised down its demand growth forecast for 2025. As OPEC+ unwinds output cuts, it must carefully manage supply to avoid further destabilizing the oil market.