RIYADH: The International Energy Agency has downgraded its outlook for global oil demand growth in 2025, warning that a weakening global economy and rising trade tensions are weighing heavily on consumption.
In its monthly oil market report released on Tuesday, the Paris-based agency revised its demand growth forecast down by 300,000 barrels per day, to 730,000 bpd for 2025. The IEA expects the slowdown to continue into 2026, when demand is projected to rise by just 690,000 bpd—one of the slowest rates in recent years.
The downgrade comes despite a strong first quarter, in which global oil consumption rose by 1.2 million bpd—its fastest pace since 2023.
However, that momentum is expected to fade amid a more fragile economic backdrop, particularly in advanced economies, where industrial activity and freight transport remain under pressure.
At the same time, oil prices have fallen sharply in recent weeks, reflecting growing concerns about oversupply and faltering demand.
Brent crude, the international benchmark, has dropped around $10 per barrel since March, falling to $65 and briefly dipping below $60 earlier this month—the lowest level since 2021.
According to the IEA, crude production among nine key OPEC+ countries rose by 60,000 bpd in March, reaching 21.94 million bpd—exceeding the group’s agreed target by 830,000 bpd. Saudi Arabia, which has led efforts to curb supply, edged output up slightly to 9.01 million bpd, just above its target of 8.96 million bpd. The Kingdom retains the largest spare capacity in the group, with the ability to raise output by more than 3 million bpd if required.
Other major producers, including Iraq, the UAE and Kuwait, all produced well above their assigned quotas. Iraq pumped 4.32 million bpd in March, compared to a target of 3.88 million bpd. The UAE exceeded its ceiling by 350,000 bpd, while Kuwait overproduced by 100,000 bpd. Nigeria was the only major member to fall short of its target, producing 1.4 million bpd—just below its 1.5 million bpd quota—amid ongoing operational and security challenges.
In a further sign of a weakening market, global oil inventories rose by 21.9 million barrels in February, climbing to 7.65 billion barrels. Crude and feedstock stocks increased by over 41 million barrels, while refined product inventories fell by 19.2 million barrels, driven by draws in OECD countries.
Refining margins also softened in March, particularly in the Atlantic Basin, where cracks for middle distillates narrowed. In response, the IEA cut its 2025 forecast for global crude throughput by 230,000 bpd, now expecting refiners to process 83.2 million bpd this year. A modest increase to 83.6 million bpd is forecast for 2026.
Despite plans by OPEC+ to increase output targets by 411,000 bpd in May, the IEA warned that any actual increase could be muted by existing overproduction and patchy compliance with quotas. It also trimmed its forecast for non-OPEC+ supply growth in 2025 by 260,000 bpd, now projecting a rise of 1.2 million bpd.
With rising economic risks, volatile geopolitics, and uncertain production policy all in play, the global oil market faces a turbulent road ahead.
