IEA cuts oil demand growth forecast amid escalating trade tensions
Paris-based International Energy Agency (IEA) now sees global oil demand to grow by 730,000 b/d in 2025, about 300,000 b/d lower than its previous estimate.
IMAGE: Oil barrels. Getty Images
The reduction comes amid escalating trade tensions between the US and its trade partners, notably China, that have “negatively impacted the economic outlook,” the IEA notes.
Oil demand growth is expected to decelerate in 2026 to 690,000 b/d, “but risks to the forecasts remain rife given the fast-moving macro backdrop,” the IEA estimates.
“After a period of relative calm, global oil markets were roiled by a barrage of trade tariff announcements in early April.”
Earlier this month, Brent crude’s price plunged to its lowest level in four years following a sharp escalation in trade tensions with the US imposing tariffs on its global trade partners and the prospect of higher supplies from some OPEC+ countries, the IEA says.
“Concerns that the measures [US tariffs] could stoke inflation, slow economic growth and intensify trade disputes weighed on oil prices. With negotiations and countermeasures still ongoing, the situation is fluid and substantial risks remain,” the IEA said in its monthly Oil Market Report (OMR).
Supply forecast
Global oil supply rose by 590,000 b/d to 103.6 million b/d in March, up 910,000 b/d year-on-year, with non-OPEC+ countries leading both monthly and annual gains.
OPEC+ is expected to hike output by 411,000 b/d in May, “but the increase may be substantially lower given overproduction by some countries,” the IEA notes.
The agency now sees global oil supply growth for 2025 at 1.2 million b/d, a decrease of 260,000 b/d from its previous estimate, due to lower output from the US and Venezuela. It expects global oil production in 2026 to grow by 960,000 b/d.
Non-OPEC+ production is expected to rise by 920,000 b/d in 2025, “comfortably eclipsing expected global demand growth".
“With arduous trade negotiations expected to take place during the coming 90-day reprieve on tariffs and possibly beyond, oil markets are in for a bumpy ride and considerable uncertainties hang over our forecasts for this year and next,” the energy agency remarks.
By Aparupa Mazumder
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