The International Energy Agency (IEA) announced on Thursday that the global oil market will remain comfortably supplied in 2025, even as OPEC+ extends its oil supply cuts and raises its demand forecasts slightly.
Key Highlights:
Market Outlook:
The IEA’s forecast indicates continued challenges for OPEC+, which includes the Organization of the Petroleum Exporting Countries and its allies like Russia. OPEC+ plans to gradually increase output in 2025 after years of production cuts.
Demand Growth Adjustments:
Oil demand growth for 2025 has been revised upward to 1.1 million barrels per day (bpd), up from 990,000 bpd last month. This increase is primarily attributed to stimulus measures in China and growing demand in Asian countries.
China’s Economic Influence:
China’s economic challenges and a shift towards electric vehicles have tempered oil consumption growth. However, the country is expected to adopt a more lenient monetary policy next year, marking its first easing in 14 years.
Supply Projections:
Non-OPEC+ nations are projected to increase oil supply by approximately 1.5 million bpd next year, led by the United States, Canada, Guyana, Brazil, and Argentina. This supply growth is anticipated to outpace demand growth.
Current Market Conditions:
The IEA noted that the global oil market is expected to be “comfortably supplied,” with a projected 950,000 bpd supply surplus next year, which could rise to 1.4 million bpd if OPEC+ proceeds with its planned output increases.
OPEC+ Strategy:
To stabilize the market, OPEC+ recently delayed the start of output increases by three months to April and extended the timeline for unwinding cuts until the end of 2026 due to weak demand and increasing production outside the group.
Price Reactions:
Following the report, oil prices experienced a slight decline, with Brent crude trading below $74 per barrel.
Demand Growth Forecasts:
The IEA has adjusted its 2024 world demand growth forecast down to 840,000 bpd, a decrease of 80,000 bpd from the previous month. In contrast, OPEC maintains a more optimistic outlook, predicting demand growth of 1.61 million bpd for 2024.