IEA sees comfortable oil supply in 2025 despite OPEC’s extended cuts

The global oil market is expected to remain well-supplied in 2025, according to the International Energy Agency (IEA), even as the Organisation of the Petroleum Exporting Countries (OPEC) maintains production cuts and demand projections show slight growth.

The IEA’s outlook, released in its monthly oil market report on Thursday, suggests ongoing challenges for OPEC, which plans to begin increasing output in 2025 after years of reductions.

Oil demand growth has been subdued this year, primarily due to weaker-than-anticipated consumption in China. Once a key driver of global oil demand, China’s economic challenges and its pivot towards electric vehicles have dampened its appetite for crude.

However, the IEA revised its global oil demand growth forecast for 2025 upwards to 1.1 million barrels per day (bpd), compared to 990,000 bpd in its previous forecast. The agency attributes the adjustment to China’s recent economic stimulus measures, which are expected to boost consumption across Asia.

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China, the world’s second-largest oil consumer, is adopting a more accommodative monetary policy for the first time in over a decade, signalling efforts to revive its slowing economy.

While demand is set to grow, non-OPEC producers are projected to increase supply by about 1.5 million bpd in 2025, outpacing demand growth. Key contributors include the United States, Canada, Guyana, Brazil, and Argentina, according to the IEA.

“The relatively subdued pace of global oil demand growth is set to continue in 2025, accelerating only modestly,” the report noted, adding that the market appears “comfortably supplied.”

Brent crude prices reacted to the report, slipping below $74 per barrel after an earlier rise.

OPEC faces extended cuts

OPEC has been grappling with sluggish demand and rising production from non-member countries. In response, the group extended its production cuts, delaying the start of output increases until April 2025 and pushing the full unwinding of cuts to the end of 2026.