In This Article:
(Bloomberg) -- The International Energy Agency once again slashed expectations for a global oil surplus this year amid stronger demand growth in Asia and sanctions on OPEC+ nations.
Most Read from Bloomberg
-
Saudi Arabia’s Neom Signs $5 Billion Deal for AI Data Center
-
SpaceX Bid to Turn Texas Starbase Into City Is Set for Vote in May
-
Cutting Arena Subsidies Can Help Cover Tax Cuts, Think Tank Says
The agency now sees an overhang of 450,000 barrels a day in 2025, marking a cut of roughly 50% in just two months. It bolstered forecasts for world oil consumption this year by just under 100,000 barrels a day, to 1.1 million per day, and cut projections for output from OPEC+ nations including Russia and Iran as the US targets their shipments.
“Anxiety over the impact of new sanctions on Russia and Iran, with fears of potential supply disruptions, triggered an upswing in prices” last month, the Paris-based adviser to major economies said in its monthly report.
Crude futures topped $80 a barrel in London in January, but have since subsided as traders grapple with new trade tariffs from President Donald Trump. Brent is trading below $75 after the biggest decline in two months on Wednesday, when Trump and his Russian counterpart, Vladimir Putin, agreed to talks on ending the war in Ukraine.
Global oil demand remains on track to average record levels of 104 million barrels a day this year, according to the report.
China will remain the biggest driver of the demand expansion, though its growth will slow this year to 210,000 barrels a day, and there are signs the country’s fuel consumption “may even have passed its peak,” the IEA said. India and other Asian nations will take up an increasing share of consumption growth.
Meanwhile, oil supply risks are growing. The IEA lowered projections for OPEC+ output in 2025 by 170,000 barrels a day following sweeping sanctions by the Biden administration on Russia and Trump’s warning of “maximum pressure” on Iran.
The agency continues to assume that the OPEC+ alliance as a whole will call off plans to revive halted output, which it has already delayed three times, despite Trump’s call for the cartel to “cut the price of oil.”
Saudi Arabia and its partners are due to decide on the first in a series of monthly supply hikes in coming weeks, and the IEA’s data indicates a considerably larger global supply overhang if the cartel proceeds with the increases.
The IEA lowered estimates for Russia’s average output in 2025 to 10.61 million barrels a day, from 10.76 million per day a month ago. Yet it cautioned that the outlook for sanctions, as well as Trump’s raft of trade tariffs, remains uncertain. Output from countries subject to restrictions could prove resilient.