Global oil demand can take a hit from tariffs - IEA
Paris-based energy agency is aware of demand risks from US tariffs, but still thinks global oil demand will grow by 1 million b/d to reach 103.9 million b/d in 2025.
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Asia will account for almost 60% of global oil demand in 2025, “led by China where petrochemical feedstocks will provide the entirety of growth,” the International Energy Agency (IEA) said.
Lower oil prices in 2025 are expected to boost some demand, the IEA projects. But macroeconomic conditions that underpin oil demand growth may deteriorate due to trade tensions between the US and “several other countries,” the agency said.
“New US tariffs, combined with escalating retaliatory measures, tilted macro risks to the downside,” the IEA said in its monthly Oil Market Report (OMR).
Supply forecast
Global oil supply rose by 240,000 b/d to 103.3 million b/d in February, primarily due to overproduction within the OPEC+ group.
“Kazakhstan pumped at an all-time high as Tengiz ramped up, while Iran and Venezuela boosted flows ahead of tighter sanctions,” the IEA explained.
Venezuelan supply is expected to decline from April, after US-oil company Chevron’s license to operate in the country expires. Meanwhile, the latest round of US sanctions against Russia and Iran’s energy sectors have yet to materially impact global oil supply, the IEA said.
Non-OPEC+ production is expected to rise by 1.5 million b/d in 2025. OPEC+ production could “hold steady” this year, if voluntary cuts are maintained after April, the IEA said.
“The United States is currently producing at record highs and is forecast to be the largest source of supply growth in 2025, followed by Canada, Brazil and Guyana,” the IEA added.
The IEA currently sees global oil supply exceeding demand by around 600,000 b/d in 2025.
“If OPEC+ extends the unwinding of output cuts beyond April without reining in supply from members currently overproducing versus their targets, another 400 kb/d [400,000 b/d] could be added to the market,” the energy agency said.
By Aparupa Mazumder
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