Ample supply for crude markets in 2025 despite stronger demand – IEA

LONDON (ICIS)–Global crude oil markets are likely to be comfortably supplied next year despite moves by OPEC+ to hold back on easing production cuts and anticipated firmer demand, the International Energy Agency (IEA) said on Thursday.

Oil demand in 2025 is expected to pick up from 840,000 barrels/day this year to 1.1 million barrels/day next year, bringing total daily consumption to 103.9 million barrels, according to the agency.

The petrochemicals sector is expected to be the key driver for that uptick, with transport fuels consumption growth still constrained, and China demand still substantially slower than might have been predicted a few years earlier.

Total oil supply growth is expected to increase by 1.9 million barrels/day next year, compared to a 630,000 barrels/day increase in 2024, driven by non-OPEC+ nations, which are expected to comprise 1.5 million barrels/day of the growth.

The OPEC+ coalition of nations announced plans last week to hold back on easing voluntary production cuts and slow the rates at which some of the measures are phased out, in the face of continued slow demand growth.

OPEC+ member states agreed to extend voluntary cuts amounting to approximately 2.2 million barrels/day through to the end of March next year, and slow the pace of the reintroduction of those volumes so that the process will run through to September 2026.

Additional voluntary cuts amounting to 1.65 million barrels/day are to be held in place until the end of December 2026, OPEC added.

The moves have substantially reduced the projected supply overhang for 2025, the IEA said, but demand trends still point to an ample buffer of available product.

“Persistent overproduction from some OPEC+ members, robust supply growth from non-OPEC+ countries and relatively modest global oil demand growth leaves the market looking comfortably supplied in 2025,” the agency said in its monthly oil report.

The US, Brazil, Canada and Guyana are expected to drive production growth next year, while OPEC+ crude output may still stand to increase if Libya, Sudan and South Sudan sustain volumes and additional capacity comes onstream in Kazakhstan, the IEA said.

Crude price moves have been relatively subdued in recent months despite geopolitical tensions, with Brent crude futures averaging around $73/barrel, the IEA said, a trend that has continued into December, with midday trading prices of around $73.47 on Thursday.

Despite the latest measures announced by OPEC+ and political uncertainty across parts of the globe, demand remains the big question for next year, the agency said.

“The abrupt halt to Chinese oil demand growth this year – along with sharply lower increases in other notable emerging and developing economies such as Nigeria, Pakistan, Indonesia, South Africa and Argentina – has tilted consensus towards a softer outlook,” the IEA said.

Thumbnail photo: An oil platform off the coast of California (Source: Shutterstock)