IEA Sees Large Oil Glut in 2025 Despite OPEC+ Delay to Supply Hike

The global oil market will find itself in a large surplus next year, even as OPEC+ has decided to defer the start of production increases to April, the International Energy Agency (IEA) said on Thursday.

The OPEC+ group last week decided to delay the start of the easing of the 2.2 million bpd cuts to April 2025, from January 2025. The group also extended the period in which it would unwind all these cuts into the following year, until September 2026.

While the OPEC+ decision “has materially reduced the potential supply overhang that was set to emerge next year,” overproduction from within the OPEC+ group and strong supply growth from non-OPEC+ producers would leave the market comfortably supplied next year, the IEA said in its Oil Market Report for December.

Due to the uncertainty of the OPEC+ supply next year, the IEA’s latest forecasts of market balances exclude higher supply from the group.

So even if OPEC+ keeps its oil production as-is for the whole of 2025, there would still be a surplus in supply of 950,000 barrels per day (bpd) next year.

If OPEC+ does begin unwinding the voluntary cuts from the end of March 2025, this glut would swell to 1.4 million bpd, according to the agency.

“A key uncertainty for the trajectory of OPEC+ crude supply remains the level of compliance with agreed targets, with our estimates showing collective output 680 kb/d above targets in November,” the IEA said.

Next year, global oil demand is set to grow by 1.1 million bpd, lifting consumption to 103.9 million bpd, per the agency’s latest estimates.

However, supply is set to outstrip demand. Total oil supply is on track to rise by 1.9 million bpd in 2025, to 104.8 million bpd, even in the absence of the unwinding of OPEC+ cuts, according to the agency.

Non-OPEC+ supply will rise by about 1.5 million bpd in both years, led by the United States, Brazil, Guyana, Canada, and Argentina, the IEA said.