Global oil demand to rise to 103.9 mb/d in 2025, Asia to account for 60% of global oil demand growth

New Delhi: Global oil demand is forecast to rise to 103.9 million barrels per day (mb/d) in 2025, up from an estimated 830,000 barrels per day (kb/d) growth in 2024, according to the International Energy Agency (IEA).

Asia is projected to account for 60 per cent of the total demand increase, led by China. The IEA said China’s demand will be driven entirely by petrochemical feedstocks, with refined fuel demand plateauing.

Global oil supply increased by 240 kb/d in February to reach 103.3 mb/d, driven primarily by OPEC+. Kazakhstan’s output reached an all-time high due to the Tengiz field expansion, while Iran and Venezuela also increased production ahead of tighter sanctions.

Growth estimates for the fourth quarter of 2024 and the first quarter of 2025 have been revised to 1.2 mb/d year-on-year, due to lower-than-expected delivery data and macroeconomic uncertainty. The IEA noted that recent oil demand data have underperformed in both advanced and developing markets.

Non-OPEC+ production is projected to increase by 1.5 mb/d in 2025, with the United States, Canada, Brazil, and Guyana contributing most of the supply. The US is producing at record levels. New US tariffs on Canada and Mexico, effective April 1, may impact flows and prices. Canada and Mexico accounted for about 70 per cent of US crude imports in 2023.

OPEC+ production could remain stable in 2025 if voluntary cuts are extended beyond April. The actual supply increase from unwinding cuts may be less than the nominal 138 kb/d, as only Saudi Arabia and Algeria have the capacity to raise output. According to IEA estimates, other members exceeded their targets by 1.2 mb/d in February.

Global crude runs declined by 570 kb/d month-on-month in February to 82.8 mb/d, continuing the fall from December’s five-year high of 84.3 mb/d. Throughput is forecast to average 83.3 mb/d in 2025. Refining margins recovered as crude prices declined.

Observed global oil stocks fell by 40.5 million barrels in January, including a 26.1 mb drop in product stocks. Non-OECD crude inventories declined by 45.3 mb, while OECD stocks increased by 11.2 mb, including a 25 mb rise in industry crude stocks. Oil on water dropped by 6.7 mb in January but rebounded in February.

Crude prices declined by around USD 7 per barrel in February and early March. ICE Brent futures dropped by USD 11 per barrel over eight weeks, trading near USD 70 per barrel.

The IEA said global oil supply may exceed demand by 600 kb/d in 2025. If OPEC+ continues to unwind output cuts without addressing overproduction, an additional 400 kb/d could be added to the market.