Summary
- IEA adjusts 2025 global demand growth forecast higher by 20,000 bpd
- IEA hiked 2025 global supply growth forecast by 380,000 bpd
- IEA sees lower oil prices hitting U.S. shale oil output growth
- IEA sees global demand growing slower for rest of this year
(Reuters) – The International Energy Agency (IEA) said on Thursday that economic headwinds combined with record sales of electric vehicles will slow global oil demand growth for the remainder of 2025, as supply is set to jump from planned OPEC+ output hikes.
Lower oil prices stemming from trade tensions and rising output are impacting U.S. shale output growth, while also curbing Russian oil revenue, the IEA said in its monthly oil market report.
The IEA revised its overall 2025 demand growth forecast higher by 20,000 barrels per day (bpd) to 740,000 bpd in its May report, with growth slowing to 650,000 bpd for the rest of this year, from 990,000 bpd in the first quarter.
“Signs of a slowdown in global oil demand growth may already be emerging,” the IEA said, adding that deliveries to China and India had been weaker than expected after relatively robust imports in the first quarter.
The IEA meanwhile hiked its 2025 supply growth forecast by 380,000 bpd to 1.6 million bpd, on the expectation of higher output from Saudi Arabia.
Saudi Arabia is the only country with room to add barrels back to the market based on current production levels, the IEA said, after the OPEC+ group agreed a second monthly accelerated output increase for June at its last meeting.
The oil market surplus could see global oil storage levels rise by around 720,000 bpd this year, the IEA said, after stocks declined on average by 140,000 bpd last year.
“This sets the stage for a further rebalancing of supply and demand fundamentals.”
Heading into next year, the IEA sees demand growth averaging 760,000 bpd in 2026, with supply growth to rise by 970,000 bpd, the agency said.
LOWER OIL PRICES IMPACT KEY PRODUCERS
The IEA revised down its forecast for U.S. shale oil growth by 40,000 bpd in 2025, and by 190,000 bpd in 2026, in the wake of lower oil prices.
“One of the most immediate impacts of the recent slump in oil prices is expected to fall on US shale output,” the IEA said.
“Based on continued price weakness, we expect more activity cuts over the coming quarters,” it said, adding that large independent shale players have already announced 14 rig cuts for this year.
In its own monthly oil report on Wednesday, the Organisation of Petroleum Exporting Countries (OPEC) trimmed its forecast for oil supply growth from the U.S. and other producers outside the wider OPEC+ group for 2025.
Lower oil prices are also affecting key producer Russia, the IEA said, as monthly oil revenues declined to their lowest since June 2023 at $13.2 billion in April.
Russia’s revenues fell despite production rising by 170,000 barrels per day on the month to 9.3 million bpd, and exports by 150,000 bpd to 7.6 million bpd, according to the IEA.
RECORD EV SALES HITS DEMAND OUTLOOK
Electric car sales will exceed 20 million in 2025 and account for around a quarter of global car sales, the IEA said, marking back-to-back annual records on surging sales in China.
EV sales in China alone will hit 14 million in 2025, the IEA said.
Despite rising EV sales, the IEA reduced its forecast for oil demand displacement to 5 million bpd by 2030 in its 2025 EV outlook report, down from 6 million bpd in the previous report. EVs’ oil displacement was around 1.3 million bpd in 2024.
Reporting by Robert Harvey and Alex Lawler in London; Editing by Tomasz Janowski, Jan Harvey and David Evans
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