IEA Adjusts 2025 Oil Supply and Demand Forecasts Amid OPEC+ Production Hike

The International Energy Agency (IEA) has raised its 2025 global oil supply growth forecast to 2.5 million barrels per day (bpd), up from the previous estimate of 2.1 million bpd. This revision follows the recent decision by the OPEC+ alliance to increase production. Concurrently, the IEA has lowered its global oil demand growth forecast for 2025 to 680,000 bpd, down from 700,000 bpd, citing subdued demand in major economies and continued low consumer confidence.

On August 3, 2025, OPEC+ announced that eight of its member countries—Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman—would collectively increase oil production by 547,000 bpd in September. This decision marks an early end to voluntary production cuts originally set in place until September 2026. The move follows a similar June decision to boost production by 548,000 bpd in August.

The production increase is in response to stable global economic conditions and low oil inventories. However, the IEA has warned of a potential oversupply in the global oil market due to this surge in production, primarily driven by Saudi Arabia, amid weakening global demand. The agency noted that supply is anticipated to outpace demand significantly, with production projected to grow by 2.5 million bpd this year, creating a surplus expected to persist into 2026.

Despite the production hike from OPEC+, non-OPEC countries are expected to remain the primary drivers of supply growth in 2025. The IEA also noted that global oil refining activity is set to approach a record high of 85.6 million bpd in August.

The IEA's report suggests that the oil market may face a significant surplus, with supply potentially exceeding demand by almost 3 million bpd in 2026. This imbalance could lead to downward pressure on oil prices, affecting revenues for oil-producing countries and impacting global economic dynamics. The agency also highlighted that additional sanctions on Russia and Iran may curb supplies from these major producers, adding another layer of complexity to the market outlook.

In response to the IEA's report, oil prices fell briefly after the release. Brent crude futures slipped to around $67 per barrel, reflecting market concerns over the potential oversupply.

The IEA's latest report underscores the delicate balance between supply and demand in the global oil market. As OPEC+ and non-OPEC producers adjust their output in response to economic indicators and geopolitical developments, the potential for oversupply looms, posing challenges for market stability and pricing.