IEA Lowers Global Oil Demand Growth for This Year and 2026


   
Miguel E. Andujar
DTN Refined Fuels Market Reporter

    

    

   DAVENPORT, FL (DTN) -- Global oil demand is forecast to grow by 720,000 bpd 
this year, its lowest rate since 2009 outside of the 2020 Covid year, according 
to the International Energy Agency's July Oil Market Report. Annual growth fell 
from 1.1 million bpd in the first quarter to 550,000 bpd in the second quarter 
due to lackluster demand.

   Global oil demand growth for 2025 has been revised downward by 20,000 bpd 
from 740,000 bpd month ago estimates, reflecting weaker consumption trends, 
particularly in emerging markets. IEA eyes global oil demand growing by 720,000 
bpd to 104.4 million bpd in 2026, which was also trimmed by 20,000 bpd from the 
June OMR forecast.

   On the supply side, IEA reports global oil supply rose sharply in June, up 
950,000 bpd to 105.6 million bpd, led by Saudi Arabia. Output was up by 2.9 
million bpd year on year, of which OPEC+ accounted for 1.9 million bpd. With 
expected OPEC+ production growth, global oil supply is projected to grow by 2.1 
million bpd in 2025, reaching 105.1 million bpd, followed by a 1.3 million bpd 
increase in 2026. Non-OPEC+ producers are expected to lead most of this growth, 
contributing 1.4 million bpd in 2025 and 940,000 bpd in 2026.

   Price indicators point to a tighter physical oil market than the large 
surplus in supply-demand balances suggest. Prompt time spreads remain in steep 
backwardation, signaling strong near-term demand relative to supply, while 
refinery margins have stayed healthy despite implied stock builds of 1.74 
million bpd in the second quarter. Prompt inventory data for May show oil 
stocks rose by 73.9 million bbl, driven by OECD product gains and non-OECD 
crude, particularly in China. Preliminary data for June show further builds, 
largely in oil on water and non-OECD reserves. U.S. gas liquids inventories 
climbed by 79 million bbl in 2Q25 amid strong supply and reduced ethane 
exports. China's crude inventories increased by 82 million bbl, or nearly 
900,000 bpd. The IEA notes these volumes are increasingly held as strategic 
reserves, effectively removing them from the global market. China's new 
policies position oil companies as long-term storage partners for the 
government, which impacts market balances. The pace of stock building over the 
coming months will be key to the market outlook.

   IEA expects global refinery runs to average 83.3 million bpd in 2025 and 
83.8 million bpd in 2026. Throughputs are on pace to hit 85.4 million bpd by 
August, driven by seasonal demand and increased crude burning for power 
generation, which typically doubles to 900,000 bpd during summer.

   North Sea Dated crude averaged $71.35 bbl in June, up $7 bbl month-on-month. 
Prices briefly topped $80 bbl following Israeli air strikes on Iranian targets 
but eased after a ceasefire. At last check, Dated Brent was trading just above 
$72 bbl, down $15 bbl from a year ago. Markets showed limited reaction to OPEC+ 
plans to accelerate the rollback of voluntary cuts.

   While supply is expected to outpace demand, the IEA warns that geopolitical 
risks and China's inventory strategy could disrupt balances. Close monitoring 
of refined product flows and storage trends will be key to gauging future 
market direction.




(c) Copyright 2025 DTN, LLC. All rights reserved.