Iea Sees Faster-Than-Expected Output Growth
Global oil supply is set to rise more sharply than anticipated in 2025 and 2026, driven by higher production from OPEC+ members and steady gains from producers outside the alliance, according to the International Energy Agency (IEA). In its latest monthly report, the agency said output will grow by 2.5 million barrels per day (bpd) this year, up from its earlier 2.1 million bpd forecast, and by another 1.9 million bpd next year. The upward revision follows OPEC+’s decision to unwind recent output cuts ahead of schedule, adding more crude to a market already under pressure from concerns over the impact of President Donald Trump’s tariffs on the global economy.
Demand Growth Remains Weak Across Major Economies
In contrast to robust supply, the IEA projects global oil demand to increase by just 680,000 bpd in 2025 and 700,000 bpd in 2026, both slightly lower than previous estimates. The agency cited sluggish consumption in key economies and low consumer confidence as reasons a strong rebound appears unlikely. The IEA’s demand outlook remains among the most conservative in the industry, reflecting its view that the energy transition toward renewables will accelerate. By comparison, OPEC this week kept its 2025 demand growth forecast at 1.29 million bpd, almost twice the IEA figure.
Potential Surplus And Price Pressure
With supply outpacing demand, the IEA warns the oil market could face a surplus of nearly 3 million bpd next year. Brent crude prices extended losses after the report’s release, trading below $66 a barrel. The surplus is expected to be driven largely by production increases from non-OPEC countries such as the United States, Canada, Brazil, and Guyana. However, the IEA noted that additional sanctions on Russia and Iran could partially offset the growth. The U.S. recently imposed new measures against Iran, while the European Union lowered its price cap on Russian oil as part of its latest sanctions package.
Refining Rates Near Record Highs Despite Outlook
Despite trimming its demand forecast, the IEA expects global crude oil refining rates to hit a record 85.6 million bpd in August, up from 84.9 million bpd in July. Refinery runs are forecast to rise by 670,000 bpd to 83.6 million bpd in 2025 and by a further 470,000 bpd to 84 million bpd in 2026. Growth will be fueled by better-than-expected refining activity in OECD markets and China, as well as continued Chinese stockpiling to bolster energy security. The agency said such stockpiling has provided some price support earlier this year, though it may not be enough to counterbalance the oversupply projected for the global market.