fbpx
Monday, December 23, 2024
Monday December 23, 2024
Monday December 23, 2024

IEA forecasts global oil market to stay well-supplied in 2025

PUBLISHED ON

|

Global oil market 2025: Rising Asian demand and expanded non-OPEC+ production balance supply amid OPEC+ cuts

The International Energy Agency (IEA) has predicted that the global oil market will remain comfortably supplied in 2025, even as OPEC+ prolongs its voluntary production cuts by three months. In its latest report, the agency raised its global oil demand growth forecast for 2025 to 1.1 million barrels per day (bpd), up from its previous estimate of 990,000 bpd. This adjustment reflects growing oil consumption in Asian markets, which continue to drive demand.

The IEA’s projection closely follows OPEC’s revised forecast, which anticipates global oil demand growth of 1.4 million bpd in 2025, bringing total consumption to 105.3 million bpd, up from 103.8 million bpd in 2024. Despite slight variations in estimates, both organisations suggest a steady rise in demand, though balanced by ample supply.

The extended production cuts by OPEC+—now set to last an additional three months and delaying the ramp-up phase to September 2026—have significantly reduced the risk of an oversupplied market. However, the IEA cautioned that overproduction by some OPEC+ members, coupled with robust supply growth from non-OPEC+ countries, will help ensure that the market remains well-balanced in 2025.

Global oil consumption is expected to hit 103.9 million bpd in 2025, aligning closely with OPEC+ projections. The IEA noted that most of the demand growth will stem from petrochemical feedstocks, as advancements in transport technologies and shifts in consumer behaviour continue to limit the growth of transport fuel consumption.

Embed from Getty Images

On the supply side, the report highlighted the significant contributions from non-OPEC+ countries. The United States, Brazil, Canada, Guyana, and Argentina are projected to add over 1.1 million bpd collectively, bolstering the global supply. Additionally, countries like Libya, South Sudan, and Sudan could further boost OPEC’s production if they maintain current levels, supported by the expansion of Kazakhstan’s Tengiz oil field.

Saudi Arabia is also poised to see a boost in its oil supply in 2025. The IEA forecasted that the Kingdom’s production would benefit from Saudi Aramco’s Jafurah gas project, which is expected to significantly increase natural gas liquids output. The Jafurah gas field, part of Aramco’s broader master gas system expansion, is set to enhance infrastructure capacity by 3.15 billion standard cubic feet per day.

In June, Saudi Aramco finalised $25 billion in agreements to advance the second phase of the Jafurah project and the third phase of the master gas system upgrade. These developments underline Saudi Arabia’s long-term commitment to expanding its energy capabilities, particularly in natural gas and related by-products, which will complement its oil production strategy.

The IEA’s report also explored the implications of OPEC+ strategies on market dynamics. While extended cuts are expected to ease the potential supply surplus in 2025, the overall growth in global production—particularly from non-OPEC+ producers—will prevent significant supply constraints.

With rising demand in Asia acting as a cornerstone of the 2025 outlook, the balance between OPEC+ policies and non-OPEC+ growth will remain critical. The IEA’s forecasts suggest that the oil market will navigate these challenges with relative stability, ensuring that supply comfortably meets demand in the years ahead.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Related articles