IEA Warns of Oil Market Surplus Amid Weak Demand in 2025
Global oil demand will rise by 920,000 barrels per day (bpd) this year, the International Energy Agency (IEA) said on Thursday, lifting its growth estimate from a month ago, but warned that weak demand growth will lead to a supply overhang next year.
In its monthly oil market report today, the IEA raised its 2024 oil demand growth estimate to 920,000 bpd, up from 862,000 bpd in the October report.
The demand growth projection for 2025 was revised slightly down to 990,000 bpd from 998,000 bpd, as the agency warned that demand growth this year and next will be much lower than in previous years, also because of weak Chinese demand.
The IEA’s estimate is still a mile away from OPEC’s. Despite cutting its estimate of global oil demand growth for the fourth consecutive month, OPEC sees demand growth of 1.82 million bpd in 2024 and 1.54 million bpd next year.
“The slowdown in growth from recent years reflects the end of the post-pandemic release of pent-up demand and below-par underlying global economic conditions, as well as clean energy technology deployment,” the IEA said in its Oil Market Report (OMR) today.
With only six weeks left of the year, global oil demand is on track to expand by just 920,000 bpd to an average 102.8 million bpd in 2024. This would compare with growth close to 2 million bpd last year and 1.2 million bpd per year on average over the period 2000 to 2019, the agency said.
“China’s marked slowdown has been the main drag on demand, with its growth this year expected to average just a tenth of the 1.4 mb/d increase in 2023,” the IEA said.
Chinese oil demand contracted for a sixth straight month in September. In the third quarter of 2024, average demand in the world’s top crude oil importer was 270,000 bpd below the average for the same period last year, per the IEA’s estimates.
While demand is sluggish, global oil supply is rising “at a healthy clip,” the agency said. The United States will continue to lead non-OPEC+ supply growth of 1.5 million bpd in both 2024 and 2025, along with higher output from Canada, Guyana, and Argentina.
“Our current balances suggest that even if the OPEC+ cuts remain in place, global supply exceeds demand by more than 1 mb/d next year,” the IEA said.