PARIS (Realist English). A sharp increase in global oil production, led by Saudi Arabia, will begin to collide with softening demand — particularly in Asia — in the final quarter of this year, the International Energy Agency (IEA) warned on Wednesday.
The agency cut its forecast for global demand growth in 2025 to 680,000 barrels per day, down a third from its January projection and marking the slowest expansion since 2009 outside the Covid-19 downturn. The downgrade reflects slowing consumption in China, India and Brazil, all of which face potential high US tariffs on their exports.
After two years of relative market balance, supply is now running ahead of requirements, the IEA said, raising the risk of “a large overhang in the market.” With Opec lifting production, the agency now expects global supply to rise by 2.5mn b/d this year — about 30% higher than its January estimate.
In the first half of 2025, much of the excess crude flowed into storage, with China absorbing more than 90% of the second-quarter increase. But from the autumn, after a peak summer refining season to meet fuel demand, the IEA predicts a surplus of around 2mn b/d will persist well into 2026.
The agency cautioned that the oversupply picture could shift if the US tightens sanctions on Russia and Iran, the world’s third- and fifth-largest oil producers.
The IEA’s projections diverge sharply from Opec’s latest monthly report, released Tuesday. Opec raised its own demand forecast for this year and lowered expectations for production growth among US and other non-Opec producers. The cartel forecasts global oil demand to rise by 1.38mn b/d in 2026 — nearly double the IEA’s growth estimate.
