The International Energy Agency (IEA) has released its latest Oil Market Report, projecting a significant slowdown in global oil demand growth for the remainder of 2025. The agency anticipates an increase of only 650,000 barrels per day (bpd) in the coming months, a decline from the 990,000 bpd observed in the first quarter. This deceleration is attributed to economic uncertainties and the rising adoption of electric vehicles (EVs).

Despite the anticipated slowdown, the IEA has slightly raised its annual demand growth forecast to an average of 740,000 bpd for 2025, citing improved economic outlooks and lower oil prices fostering consumption. For 2026, demand growth is expected to be similar at 760,000 bpd.

On the supply side, the IEA increased its 2025 growth forecast by nearly 400,000 bpd to 1.6 million bpd, primarily due to anticipated higher output from Saudi Arabia, the only major producer capable of significantly increasing output. However, U.S. shale oil production is expected to decline in response to weaker prices, with forecasts cut by 40,000 bpd for 2025 and 190,000 bpd for 2026.

The IEA also anticipates that the supply surplus will lead to a rise in oil storage levels by an average of 720,000 bpd this year, reversing a decline of 140,000 bpd in 2024.

The IEA's projections indicate a shift in the global oil market dynamics, influenced by economic factors and technological advancements. The agency's report underscores the need for stakeholders to adapt to these evolving trends to maintain market stability.