RIYADH: Global oil consumption is projected to increase by 1.21 million barrels per day in 2025, reaching a total of 103.74 million bpd, according to an analysis by the King Abdullah Petroleum Studies and Research Center.
The Saudi-based think tank’s latest report also forecasts that oil demand will rise by 1.23 million bpd in 2026, bringing global consumption to 104.97 million bpd.
KAPSARC’s forecast for 2025 is slightly lower than the projection made by the Organization of the Petroleum Exporting Countries in December 2024. OPEC predicted a 1.4 million bpd increase in global oil demand for 2025, bringing the total to 105.3 million bpd.
The KAPSARC analysis highlights several key factors that will influence oil demand growth in 2025 and 2026. While economic conditions and OPEC+ actions have been significant drivers of the oil market in recent years, the report emphasizes that new factors, such as geopolitics, inventory levels, and, to a lesser extent, the global energy transition, will play an increasingly prominent role in shaping market volatility in the coming years.
“Over the past couple of years, some of the main drivers for oil markets have been linked to the economy and OPEC+ actions. However, as we head into 2025 and 2026, new actors will start playing a more important role in shaping oil market volatility — namely, geopolitics, inventory filling, and, to a lesser extent, the energy transition,” KAPSARC noted in its report.
Inflation is also expected to be a major factor in oil demand growth, with global inflation likely to remain above pre-pandemic levels in the next two years. This persistent inflationary pressure could affect both consumption patterns and investment in energy markets.
According to KAPSARC, countries in the Organisation for Economic Co-operation and Development will see minimal or no growth in oil demand over the next two years. In contrast, non-OECD nations — particularly India and the Middle East—are expected to experience significant demand growth.
India, for example, is forecast to see an increase in oil consumption of 220,000 bpd in both 2025 and 2026. China’s demand growth will remain relatively modest, with increases of 210,000 bpd in 2025 and 190,000 bpd in 2026. The Middle East is projected to experience a growth of 200,000 bpd in each of the next two years.
As a result, the overall growth in oil demand for non-OECD countries is expected to reach 1.09 million bpd annually in 2025 and 2026.
In terms of oil supply, KAPSARC expects global production to increase by approximately 1.48 million bpd in 2025 and 1.98 million bpd in 2026. The report predicts a supply surplus of 260,000 bpd in 2025, followed by a larger surplus of 1.01 million bpd in 2026.
However, KAPSARC also cautions that if OECD countries continue to maintain their historically low inventory levels, as seen in recent years, this could contribute to bearish conditions in the oil commodities market.
“Given the dynamics between oil supply and demand, we anticipate an overall surplus in both 2025 and 2026. If OECD countries keep their inventory levels low, we could see continued downward pressure on oil prices,” KAPSARC concluded.
