London, 14 October (Argus) — The IEA has raised its forecast for global oil supply growth by around 300,000 b/d for both 2025 and 2026, while keeping demand projections well below historical norms.
World oil supply is now expected to rise by 3mn b/d to 106.1mn b/d in 2025, and by a further 2.4mn b/d next year to reach 108.5mn b/d, according to the agency’s latest Oil Market Report. This compares with its previous forecast of 2.7mn b/d and 2.1mn b/d, respectively.
The upward revision widens the gap with global oil demand, which the IEA now expects to grow by just 710,000 b/d to 103.84mn b/d this year, and by 700,000 b/d to 105.54mn b/d in 2026.
Opec+ accounts for 1.4mn b/d of this year’s supply growth — about 130,000 b/d more than previously forecast — as the group continues to unwind output cuts. The IEA has downgraded its 2025 supply outlook for Russia and Iran, citing increased sanctions pressure and Ukrainian attacks on Russian refining infrastructure, which it says have cut Moscow’s refining capacity by an estimated 500,000 b/d. But these losses are offset by upward revisions to output in Middle Eastern Opec+ countries and Venezuela.
The agency also raised its non-Opec+ growth forecast by 200,000 b/d to 1.6mn b/d in 2025, and by 110,000 b/d to 1.2mn b/d in 2026, led by stronger output from Brazil, the US and Canada.
While supply growth is expected to accelerate, the IEA continues to forecast a sharp slowdown in demand growth. The 710,000 b/d projection for 2025 marks a 30,000 b/d downgrade from last month and is around 270,000 b/d below growth in 2024.
The agency attributes the slowdown to weaker macroeconomic conditions and rising electrification in transport. “The three primary fuels — gasoil, gasoline and /kerosine — representing around 60pc of global oil demand, are only now consistently scaling their peak pre-pandemic levels, as sub-par economic conditions, combined with increasing vehicle efficiencies and electrification, make for formidable headwinds,” it said.
Demand growth is increasingly reliant on petrochemical feedstocks, but consumption has been subdued this year. The IEA now expects combined demand for naphtha, ethane and LPG to rise by just 230,000 b/d in 2025, compared with 690,000 b/d last year.
The IEA’s outlook remains in sharp contrast to Opec’s, which expects global oil demand to grow by 1.29mn b/d this year and by 1.38mn b/d in 2026.
By James Keates
