Oil Oversupply Looms in 2025, IEA Warns
In a bold statement, the International Energy Agency (IEA) declared in its latest oil market report that the world’s oil supply will outstrip demand by 2025, even with ongoing cuts by OPEC+. This imbalance is attributed to the combination of increased production from non-OPEC+ countries and lackluster global demand growth.
Supply Surpasses Demand
The IEA projected that global supply will exceed demand by over 1 million barrels per day in the coming year, despite the efforts of OPEC+ to curb production. This forecast remains unchanged, with oil demand expected to rise by 990,000 bpd in 2025.
Rise in Non-OPEC+ Production
Non-OPEC+ supply is anticipated to increase by 1.5 million bpd next year, driven by enhanced output from countries like the US, Canada, Guyana, and Argentina. This surge in production outside the OPEC+ alliance is a significant factor contributing to the oversupply.
OPEC Cuts Demand Forecast
OPEC also revised its global oil demand growth forecast downward for the fourth consecutive month, citing weakness in key markets such as China and India. The subpar global economic conditions post-pandemic have dampened demand, with growth expected to remain below 1 million bpd for 2024.
Impact of Cleaner Energy Technologies
The IEA highlighted the impact of cleaner energy technologies on oil demand, noting a slight upward adjustment to its 2024 forecast due to higher gasoil demand in OECD countries. Despite this adjustment, the agency warns that the rapid development of alternative energy sources continues to displace oil in the global energy landscape.