IEA cuts global oil demand estimates again

Paris-based International Energy Agency (IEA) now expects global oil demand to grow by 700,000 b/d in 2025, slightly lower than its previous estimate.

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Oil demand growth is expected to hit its lowest rate since 2009, “with the exception of the 2020 Covid year,” according to the IEA.

Annual demand growth for crude oil has eased from 1.1 million b/d in the first quarter of 2025 to just 550,000 b/d in the April-June period, “with emerging market consumption particularly lacklustre,” the agency says.

However, the ongoing summer travel season in the Northern Hemisphere is expected to drive higher crude burns through August, the agency notes.

In 2026, global oil demand is estimated to grow by 720,000 b/d to reach an average of 104.4 million b/d. This is about 20,000 b/d lower than the agency's last month’s projection.

Meanwhile, US-based energy agency US Energy Information Administration (EIA) expects global oil consumption to increase by 800,000 b/d in 2025 – slightly higher than IEA’s projection – and by 1.1 million b/d in 2026, driven “almost entirely by demand from non-OECD countries,” like China and India.

Supply forecast

The IEA projects global oil supply to grow by 2.1 million b/d to average 105.1 million b/d in 2025, and rise by another 1.3 million b/d to average 106.4 million b/d in 2026. Supply growth in both years is expected to be driven by non-OPEC+ producers, who will add about 1.4 million b/d of crude in 2025 and 940,000 b/d in 2026.

Global oil supply rose by 950,000 b/d in June to 105.6 million b/d. The supply growth was mostly due to the unwinding of voluntary OPEC+ production cuts, led by Saudi Arabia, the energy agency notes in its monthly Oil Market Report (OMR).

Earlier this month, eight members of the OPEC+ alliance announced a larger-than-expected boost in output targets for August at 548,000 b/d, “effectively unwinding 80%” of the 2.2 million b/d voluntary production cuts in place since 2023, the IEA says.

At 548,000 b/d, the planned production increase for August is four times higher than their original plan to unwind output cuts at a rate of around 137,000 b/d each month between April 2025 and September 2026.

“Reports suggest the group may follow-up with the same outsized increase in September, which will complete the planned return of supply a full year ahead of the original schedule,” the Paris-based agency adds.

By Aparupa Mazumder

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