The IEA raised its 2025 oil demand growth forecast to 1.1 million barrels per day (mbbl/d) from 990,000bpd last month. Credit: T.Schneider/Shutterstock.

The IEA expects the global oil market to be well supplied in 2025, despite increasing demand and extended production cuts by the OPEC+ alliance.

In its latest report, the IEA revised its 2025 global oil demand growth forecast to 1.1mbbl/d, up from last month’s estimate of 990,000bpd.

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Despite the rise, the agency highlighted subdued demand growth driven by economic challenges in China and the global transition towards electric vehicles.

China, previously a major driver of oil demand, is now adopting measures to boost its slowing economy, including a shift to a looser monetary policy in 2024.

While demand growth remains modest, the IEA expects non-OPEC+ nations including the US, Canada, Brazil, Guyana and Argentina to increase oil supply by approximately 1.5mbbl/d next year, outpacing demand growth.

The OPEC+ group, which includes major oil producers such as Saudi Arabia and Russia, recently postponed the easing of production cuts by three months to April 2025 and extended cuts until the end of 2026.

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However, the IEA predicts a supply surplus of 950,000bpd in 2025, even before OPEC+ begins reversing production cuts. If cuts are fully unwound as planned, the surplus could rise to 1.4mbbl/d.

The IEA’s outlook poses challenges for OPEC+, which faces weaker-than-expected demand and rising competition from non-OPEC+ producers.

In contrast, OPEC’s latest forecast anticipates stronger demand growth of 1.61mbbl/d in 2024 and 1.45mbbl/d in 2025, higher than the IEA’s estimates.

These differing projections underscore the uncertainty surrounding global oil demand, influenced by economic conditions in China, the pace of energy transitions and policy shifts aimed at reducing reliance on fossil fuels.