Oil Market Set for 2025 Stability Amid Global Supply Adjustments

The International Energy Agency (IEA) has forecasted that the global oil market will be well-supplied by 2025 despite prolonged production cuts by OPEC+ and a mildly increased demand prediction. This outlook underscores persistent challenges for the alliance, especially with demand fluctuations influenced by China and global shifts to cleaner energy.

The International Energy Agency (IEA) predicts that the global oil market will have ample supply by 2025, notwithstanding sustained production limits by OPEC+ and a slightly increased demand forecast. This forecast signals continual challenges for OPEC+, which includes countries like Russia aiming to increase output after years of cuts.

Oil demand growth has underperformed this year, notably due to shifting economic conditions in China. Although China's stimulus measures have boosted demand estimates to 1.1 million bpd for 2025, up from 990,000 bpd, the transition to electric vehicles complicates future growth. The IEA's updated forecast attributes this increase primarily to Asian markets.

China plans to adopt a more relaxed monetary policy, its first in 14 years, coupled with aggressive fiscal strategies to stimulate growth. OPEC+ has deferred its production increase until April, extending the full removal of cuts until late 2026, in response to weak demand and outside production surges.

The IEA warns of a 950,000 bpd oil supply surplus next year, potentially expanding to 1.4 million bpd if OPEC proceeds with unwinding cuts from March. Differing views on 2024 demand, influenced by China's role and cleaner fuel adoption, place IEA's growth projections at the lower range of industry forecasts.

(With inputs from agencies.)