The upcoming year is expected to be benign for the oil market. Analysts at the International Energy Agency (IEA) have raised their oil demand forecast for 2025, citing the impact of China's stimulus measures. However, there is still a fly in the ointment – the IEA believes that the growth rate of demand will remain restrained.

According to the agency’s estimates, global oil demand in 2025 will grow by 1.1 million barrels per day (bpd). The previous estimate was 990,000 bpd. However, the forecast for the current year was revised downward to 840,000 bpd, from the earlier estimate of 921,000 bpd, due to reduced deliveries to China, Saudi Arabia, and Indonesia.

These forecasts are significantly lower than in 2023 when growth exceeded 2 million bpd. The reason lies in changes in the structure of oil consumption. Moreover, the IEA’s estimates are much lower than those of OPEC, which continues to project demand growth of 1.61 million bpd by the end of 2024 and 1.45 million bpd in 2025.

However, the IEA remains cautious about such optimism, which is considered unreasonable. “The big question for 2025 is: what global oil demand will look like. The sharp halt in demand growth in China... has tilted the consensus toward a softer outlook,” the agency noted in its report.

In October 2024, oil demand in China remained at last year’s levels but declined compared to the previous month. The agency expects the world’s largest crude importer to see demand growth of 140,000 bpd in 2024 and 220,000 bpd in 2025. Global demand is forecasted at 102.8 million bpd this year and 103.9 million bpd next year.

According to the IEA, the current hydrocarbon market balance points to an oversupply of 950,000 bpd in 2025. OPEC and its allies attempted to balance supply and demand but have been unsuccessful. The cartel’s decision to delay production increases dented the potential surplus but did not eliminate it. If OPEC+ countries abandon voluntary cuts by the end of March 2025, the surplus could rise to 1.4 million bpd.

Global oil supply grew by 130,000 bpd In November 2024 alone due to the prolonged recovery of production in Libya and Kazakhstan. However, non-OPEC production declined due to seasonal reductions in biofuel output in Brazil and the effects of hurricanes in the US Gulf of Mexico. Despite this, total oil supply growth is still projected at 1.5 million bpd for 2024–2025.

In the last month of autumn, oil production in OPEC member countries increased by 310,000 bpd, standing at 41.4 million bpd. As a result, oil production by the 18 OPEC exporters exceeded their target by 680,000 bpd, according to the IEA.