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The International Energy Agency (IEA) has slashed its outlook for global oil demand growth for 2025 by a steep 300,000 barrels per day (b/d) to a total of 730,000 b/d, as rising tariffs by the United States, China and others stoke fears of inflation, slow economic growth and intensifying trade disputes.
Demand growth is expected to slow further in 2026, to 690,000 b/d, the IEA's monthly oil market report for April warned on Tuesday.
According to the Paris-based organisation, global oil demand grew by 940,000 b/d in 2024. The latest downgrade comes on the heels of robust oil consumption in the first three months of 2025, up by 1.2 million b/d year-on-year (Y-o-Y) – its strongest rate since 2023, the IEA said.
A day earlier, the Organisation of the Petroleum Exporting Countries (Opec) had also cut forecasts for global oil demand growth for this year and the next by about 100,000 barrels a day, projecting an expansion of 1.3 million b/d.
"While imports of oil, gas and refined products were given exemptions from the tariffs announced by the United States, concerns that the measures could stoke inflation, slow economic growth and intensify trade disputes weighed on oil prices. With negotiations and countermeasures still ongoing, the situation is fluid and substantial risks remain," the IEA pointed out.
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Global crude runs are forecast to average 83.2 million b/d this year, as demand growth expectations cut the projected annual increase by 230,000 b/d to 340,000 b/d. In 2026, throughputs are set to rise by 360,000 b/d to 83.6 million b/d, the IEA said. Throughput refers to the amount of crude oil processed by refineries during a specific period.
Supplies holding strong
Despite an overall glut on the production side, the IEA has cut the global supply growth for 2025 by 260,000 b/d to 1.2 million b/d, due to a decrease in United States and Venezuelan output. Production in 2026 is set to rise by 960,000 b/d, with offshore projects taking the lead, it said.
Global oil supply rose by 590,000 b/d to 103.6 million b/d in March, with non-Opec+ nations leading both monthly and annual gains. An intergovernmental organisation of 13 major oil-producing nations such as Saudi Arabia, Iran, Iraq and Venezuela, among others, Opec has been called a ‘cartel’ by economists. Ten other nations, including Russia, make up the enlarged Opec+ group.
On April 3, Opec+ nations made a surprise announcement of tripling their production increase targets to 411,000 b/d starting in May. This move brings forward a larger volume of supply as part of the ongoing unwinding of the 2.2 million b/d voluntary production cuts that have been in place since November 2023, and are being implemented by eight countries including Saudi Arabia and Russia.
"But the actual increase may be much smaller, as a number of countries, including Kazakhstan, the United Arab Emirates and Iraq, are already producing well above their targets," the IEA said.
Opec+ has also signalled its intent to uphold compliance and avoid a surplus that could further threaten to weaken crude prices. Earlier in April, Brent futures had tumbled to below $60 per barrel, their lowest level in four years.
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