Highlights from the IEA's October report
Demand:
- In 2025, global demand for oil and liquid hydrocarbons will grow by 710,000 barrels per day, to 103.84 million barrels per day; in 2026, by 699,000 barrels per day, to 104.54 million barrels per day;
- Forecasts have been adjusted slightly;
- In Q3 In 2025, the indicator increased by 750,000 barrels per day amid a recovery in demand for petrochemical feedstocks.
- This positive trend will not be long-term; oil consumption will remain low for the remainder of 2025 and into 2026 (demand is currently declining seasonally, but for some reason, the entire 2026 will also be poor).
- Unfavorable macroeconomic conditions, increased vehicle efficiency, and the electrification of transport are leading to a sharp slowdown in oil consumption growth (this is the IEA's view).
Supply:
- global oil and liquid hydrocarbons supply will increase by 3 million bpd in 2025, to 106.1 million bpd, and by 2.4 million bpd in 2026, to 108.5 million bpd
- forecasts have been increased by 330,000 bpd in 2025 and by 290,000 bpd in 2026
- non-OPEC+ countries will increase by 1.6 million bpd in 2025 and by 1.2 million bpd in 2026
- the main drivers of supply growth from non-OPEC+ countries will be the US, Brazil, Canada, Guyana, and Argentina (and the EIA expects US oil production to decline in 2026, albeit slightly - by 20,000 barrels per day (up to 13.51 million barrels per day).
Balance:
- weak demand and rapidly growing supply should create a significant surplus in the oil market – 2.26 million barrels per day in 2025 and 3.96 million barrels per day in 2026.
- the IEA attributes the lack of a real surplus to the buildup of inventories, primarily from oil in China and LPG in the US (the market would notice a 2 million barrels per day surplus; during the pandemic, prices would have fallen from 1 million barrels per day).
The estimates of the expected surplus are so significant that the IEA is acknowledging uncertainties that could impact its forecasts. These include almost all of them: sanctions against Russia and Iran, EU restrictions on imports of petroleum products from Russian feedstock, geopolitical issues, attacks on Russian energy infrastructure, and a reduction in Russian middle distillate exports. The IEA cautiously admits that the market situation could be more tense than its current forecast suggests.
