IEA lowers global oil demand forecast again

Paris-based International Energy Agency (IEA) now expects global oil demand to grow by 680,000 b/d in 2025, about 200,000 b/d lower than its previous estimate.

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Global oil demand growth has been “repeatedly downgraded” since the start of this year, by a combined 350,000 b/d, according to the IEA.

“The latest data show lacklustre demand across the major economies and, with consumer confidence still depressed, a sharp rebound appears remote,” the IEA said.

The IEA said the weaker-than-expected oil consumption in key economies, including China, India, Brazil and Egypt, has driven the latest downgrade in demand growth.

While demand in these countries has lagged in recent months, the agency noted that the 600,000 b/d annual growth in oil demand recorded in the second quarter came from the non-OECD region.

“Consumption in the OECD [group of developed countries] was flat, with Japan at multi-decade lows,” it added.

In 2026, global oil demand is estimated to grow by 700,000 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.

Supply forecast

Global oil supply was largely unchanged in July at 105.6 million b/d, the IEA noted in its monthly Oil Market Report (OMR).

The energy agency now projects global oil supply to grow by 2.5 million b/d to average 105.5 million b/d in 2025 and rise by another 1.9 million b/d to average about 107 million b/d in 2026.

“Higher OPEC+ targets announced for September help boost global oil supply growth to 2.5 mb/d [2.5 million b/d] this year and 1.9 mb/d [1.9 million b/d] in 2026,” the IEA remarked.

Of this, non-OPEC+ supply will account for 1.3 million b/d in this year and 1 million b/d in 2026, the agency added.

Earlier this month, eight members of the OPEC+ alliance announced a larger-than-expected boost in output targets for September at 547,000 b/d, fully unwinding the 2.2 million b/d voluntary production cuts in place since 2023, according to the IEA.

At 547,000 b/d, the planned production increase for September is about 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.

By Aparupa Mazumder

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