Global Oil Surplus Looms Amid OPEC+ Challenges

The International Energy Agency predicts a global oil surplus by 2025, exceeding demand even with OPEC+ cuts. Rising U.S. production and slow demand, particularly from China, are contributing factors. This challenges OPEC+'s strategy as rapid clean energy adoption further suppresses oil demand growth.

The International Energy Agency (IEA) has forecasted a global oil surplus by 2025, with supply exceeding demand even if OPEC+ cuts persist. The surplus is driven by increased production from the United States and other nations, surpassing weak demand partly owing to China's economic shifts and adoption of electric vehicles.

IEA's report highlights China's significant slowdown as a primary factor in declining demand. Additionally, the rapid deployment of clean energy technologies is reducing oil's presence in transport and power sectors, further exerting downward pressure on demand. Non-OPEC+ nations are expected to boost supply, intensifying the surplus projection.

Despite OPEC+'s recent postponement of easing production cuts due to falling oil prices, the IEA's analysis suggests that their current strategies might not curb the forecasted surplus. The agency has slightly adjusted its 2024 demand growth projections, highlighting variations in global economic conditions and contrasting forecasts with other industry estimates like OPEC's.

(With inputs from agencies.)