IEA Executive Director Birol: Oil prices may see further downward pressure.

IEA Executive Director Birol: Oil prices may see further downward pressure.

The International Energy Agency (IEA) has revised its global oil demand growth forecast for 2025, citing rising trade tensions and weaker economic conditions. According to the agency’s April Oil Market Report, global oil demand is now expected to grow by 730 Mb/d in 2025, a reduction of 300 Mb/d compared to last month’s projection. Demand growth is projected to slow further to 690 Mb/d in 2026. These figures follow a strong 1Q25, when demand rose by 1.2 MMb/d year-over-year, the highest growth rate since 2023 [1].

The IEA warned that the outlook remains uncertain due to macroeconomic volatility driven by the expanding trade conflict. US tariff measures and retaliatory actions from other economies have heightened market concerns, contributing to downward pressure on oil prices. Brent futures dropped by approximately US$10/b in March and early April, falling below US$60/b at one point, their lowest level in more than four years. At the time of the report’s release, Brent was trading around US$65/b [1].

The IEA’s Executive Director, Fatih Birol, stated that oil prices may see further downward pressure. He noted that the uncertainty in global economic growth and trade policies could lead to a significant reduction in oil demand. Birol emphasized that the current trade tensions, particularly between the US and China, are creating substantial risks for the oil market. He added that the market remains volatile and that the outlook for oil prices is uncertain [2].

On the supply side, global oil production rose by 590 Mb/d in March to 103.6 MMb/d, an increase of 910 Mb/d compared to the same period in 2024. Non-OPEC+ countries accounted for most of the monthly and annual gains. While OPEC+ plans to increase output targets by 411 Mb/d in May, actual increases may fall short due to existing overproduction by some members [1].

The IEA also adjusted its 2025 global supply growth forecast downward by 260 Mb/d to 1.2 MMb/d, driven by reduced output expectations in the United States and Venezuela. For 2026, supply is projected to increase by 960 Mb/d, primarily from new offshore production projects [1].

Refinery activity is also expected to moderate. Global crude runs are forecast to average 83.2 MMb/d in 2025, with projected throughput growth reduced by 230 Mb/d to 340 Mb/d for the year. In 2026, throughputs are set to rise to 83.6 Mb/d. Refining margins varied regionally in March, with declining margins in the Atlantic Basin offset by improvements in Singapore [1].

Global oil inventories rose by 21.9 MMb in February, reaching 7.647 Bb, but remained near the bottom of the five-year range. The increase was driven by a 41.2 MMb rise in crude oil, natural gas liquids and feedstocks, including 14.1 MMb added to OECD onshore stocks. Oil products declined by 19.2 MMb due to drawdowns in OECD countries [1].

Preliminary data indicates that inventories continued to build in March, led by non-OECD countries and increases in oil held on water [1].

For Mexico, a country that continues to depend on oil revenues to support public finances, these developments may affect export revenues and budget forecasts. The Mexican Export Blend recently fell below the government’s projected price of US$62.40/b, trading at US$59.30/b, according to Bloomberg. Each US$1 decrease in price represents a US$530 million (MXN$10.7 billion) loss in federal income, according to the Ministry of Finance [1].

Investment bank JPMorgan has also cut its oil price forecasts, in line with the IEA’s downward revisions. JPMorgan expects Brent crude to average $66 per barrel in 2025 and $58 in 2026. The bank also lowered its West Texas Intermediate forecast to $62 in 2025 and $53 in 2026 [2].

The Organization of Petroleum Exporting Countries (OPEC) has joined the market in lowering its near-term oil demand growth projections. However, OPEC’s projections still put demand growth north of seven figures at 1.3 million bpd for 2025 and 1.28 million bpd for 2026 [2].

Despite the recent recovery in oil prices, the market remains under pressure due to the uncertainty surrounding trade tensions and global economic growth. The IEA’s Birol warned that the oil market is in for a bumpy ride, and considerable uncertainties hang over the forecasts for this year and next [2].

References:
[1] https://mexicobusiness.news/oilandgas/news/iea-lowers-2025-oil-demand-forecast-amid-trade-tensions
[2] https://www.forbes.com/sites/gauravsharma/2025/04/16/jpmorgan-cuts-oil-price-forecasts-while-iea-lowers-demand-projections/