Global oil demand growth is projected to average 1.1 million barrels per day in 2025, up from 870,000 barrels per day in 2024, according to the IEA Oil Market Report for February. The report noted that China will marginally remain the largest source of oil demand growth, even as the pace of its expansion is a fraction of recent trends and driven almost entirely by its petrochemical sector.
At the same time, India and other emerging Asian economies are taking up increasing shares. OECD oil demand is forecast to return to structural decline following a modest increase last year.
Non-OPEC+ producers to drive supply growth
The IEA also revealed that in 2024, the total oil supply matched global oil demand at 102.9 million barrels per day. ‘’World oil supply plunged 950,000 barrels per day to 102.7 million barrels per day in January, as seasonally colder weather hit North American supply, compounding output declines in Nigeria and Libya,” the report said.
Supply was still 1.9 million barrels per day higher than a year ago, with gains led by the Americas. Global oil supply is on track to increase by 1.6 million barrels per day to 104.5 million barrels per day in 2025, with non-OPEC+ producers accounting for the bulk of the increase if OPEC+ voluntary cuts remain in place.
Global observed oil stocks fell 17.1 million barrels month-on-month to 7,647 million barrels in December, as crude oil stocks plunged by 63.5 million barrels and products stocks rose by 46.4 million barrels. OECD industry inventories continued to decline, by 26.1 million barrels to 2,737.2 million barrels, 91.1 million barrels below their five-year average.
Preliminary data show total global inventories falling a further 49.3 million barrels in January, led by a large crude stock draw in China.
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New U.S. tariffs and sanctions raise uncertainty
“Global oil markets were whipsawed in January as sharply higher prices at the start of the year gave way to myriad pressure points. Anxiety over the impact of new sanctions on Russia and Iran, with fears of potential supply disruptions, triggered an upswing in prices in early January,” the IEA added.
In addition, market sentiment quickly shifted to renewed concerns over the world economy amid emerging trade wars and their impact on the pace of oil demand growth. Following a price rally to a five-month high above $82 per barrel in early January, ICE Brent future prices fell back to around $75 per barrel as international trade tensions escalated.
The IEA noted that it is still too early to tell how trade flows will respond to new U.S. tariffs and what the impact of the escalation of sanctions on Iran and Russia may be in the longer run. However, oil markets have shown remarkable resilience and adaptability in the face of major challenges.
