IEA: Global Oil Demand Growth to Slow 30% in 2025

The International Energy Agency (IEA) has issued a report indicating that the growth in global oil demand is expected to decelerate significantly in the remaining months of 2025. The agency forecasts that the daily increase in oil demand will slow from 990,000 barrels per day in the first quarter to 650,000 barrels per day for the rest of the year. This slowdown is primarily due to economic headwinds and the increasing adoption of electric vehicles, which are reducing the overall demand for petroleum products.

The IEA's report underscores that trade uncertainties are likely to exert pressure on the global economy, indirectly affecting oil demand. The agency anticipates that the annual average increase in oil demand for 2025 will be 740,000 barrels per day, with a further increase to 760,000 barrels per day expected in 2026. This projection suggests a more moderate growth trajectory for oil demand in the coming years.

The IEA also forecasts that global oil supply will outpace demand growth, leading to a significant increase in oil inventories. The agency estimates that oil stocks will rise by an average of 720,000 barrels per day in 2025 and 930,000 barrels per day in 2026, compared to a decrease of 140,000 barrels per day in 2024. This surplus in supply is expected to put downward pressure on oil prices, as the market adjusts to the changing dynamics of demand and supply.

The slowdown in oil demand growth is further exacerbated by the increasing adoption of electric vehicles. The IEA's report notes that record-breaking EV sales are contributing to the reduction in oil demand, as more consumers shift towards electric transportation. This trend is expected to continue, further impacting the demand for petroleum products in the coming years.

The IEA's projections come at a time when the global economy is facing various challenges, including trade uncertainties and economic slowdowns. These factors are likely to influence oil demand, as businesses and consumers adjust their spending and consumption patterns in response to the changing economic landscape. The agency's report underscores the need for the oil industry to adapt to these changes and prepare for a future where demand for petroleum products may continue to decline.