The oil market could be even more oversupplied at the end of this year than previously expected amid tepid demand growth and surging supply from both OPEC+ and non-OPEC+ producers, the International Energy Agency (IEA) said on Wednesday.
Global oil demand is now expected to rise by just 680,000 barrels per day (bpd) this year, and by 700,000 bpd in 2026, to reach 104.4 million bpd next year, the IEA said in its monthly Oil Market Report out today.
The latest forecasts are a downward revision of 20,000 bpd in demand growth estimates from the July report—the fifth consecutive from the agency, which has slashed its projection for the 2025 oil demand growth by a combined 350,000 bpd since the beginning of the year.
The latest downgrade reflects “lacklustre demand across the major economies and, with consumer confidence still depressed, a sharp rebound appears remote,” the IEA said.
Consumption in emerging and developing economies has been weaker than expected, with China, Brazil, Egypt and India all revised down compared with last month’s report, the Paris-based agency noted.
The only bright spot in demand has been jet fuel demand, which is on track to increase by 2.1% this year, the strongest of any product, said the IEA. But the agency noted that the overall projected jet fuel consumption of 7.7 million bpd in 2025 would still be about 180,000 bpd lower compared to the 2019 pre-Covid level.
While the IEA downgraded its demand growth estimate, again, it hiked its global supply growth forecast by 370,000 bpd to 2.5 million bpd this year, after the eight OPEC+ members agreed earlier in August to boost output by 547,000 bpd in September, fully unwinding their 2.2 million bpd cuts agreed to in November 2023.
The IEA said that sanctions on Russia and Iran could curb supplies from these producers, but noted that “oil market balances look ever more bloated as forecast supply far eclipses demand towards year-end and in 2026.”
As usual, the IEA is much more bearish on oil demand growth than OPEC, which said in its own report on Tuesday that demand in 2026 is set to strengthen on the back of expected stronger economies in key oil-consuming regions.
