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American Focus > Blog > Economy > Global oil supplies forecast to outstrip demand this year despite Middle East war
Economy

Global oil supplies forecast to outstrip demand this year despite Middle East war

Last updated: June 17, 2025 2:11 am
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Global oil supplies forecast to outstrip demand this year despite Middle East war
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The latest report from the International Energy Agency (IEA) has revealed that global oil supplies are expected to exceed demand in 2025, leading to a surplus in oil inventories. Despite concerns over escalating conflicts in the Middle East, the IEA predicts that oil production will increase by 1.8 million barrels per day to 104.9 million b/d, surpassing forecasted demand of 103.8 million b/d.

According to the IEA, the rise in supply will come from both the Opec+ cartel and non-Opec+ producers, with an average addition of 1.4 million b/d over the course of the year. However, weak consumption in key markets such as China and the US is expected to limit global demand growth to 720,000 b/d, lower than previously estimated.

As a result of the surplus in supply, global oil inventories have been on the rise, with an average increase of 1 million b/d since February and a significant jump of 93 million barrels in May alone. Despite this increase, total inventories remain 90 million barrels lower than the previous year.

While the conflict between Israel and Iran poses geopolitical risks to oil supply security, the IEA noted that there has been no impact on Iranian oil flows at the time of writing. Iran recently suspended production at the South Pars natural gasfield following an Israeli air strike, but the extent of the impact on production remains unclear.

Looking ahead to 2030, the IEA forecasts that oil supply will continue to outpace demand, with global oil demand reaching a plateau of 105.5 million b/d by the end of the decade. Supply is expected to increase even more rapidly, with global production capacity rising by over 5 million b/d to 114.7 million b/d.

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The slowdown in oil demand growth is attributed to China, where the IEA anticipates consumption to peak in 2027. This shift is driven by an increase in electric vehicle sales, the expansion of high-speed rail networks, and the adoption of gas-powered trucking. This aligns with predictions from China’s largest oil companies and marks the first time the IEA has specified a timeline for peak Chinese oil demand.

Overall, the IEA’s reports highlight the complex dynamics at play in the global oil market, with supply and demand trends influenced by geopolitical tensions, technological advancements, and shifting consumer preferences. Stay informed on the latest developments in the energy sector by signing up for free updates from Oil myFT Digest.

TAGGED:demandEastForecastglobalMiddleoiloutstripSuppliesWarYear
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