11-07-2025
Global Oil Supply to Rise Faster Than Expected, IEA Says
Global oil supply is set to rise three times faster than demand this year, the International Energy Agency said in its closely watched monthly report. However, seasonal factors are keeping the market tight in the short term.
The Paris-based agency expects oil supply to grow by 2.1 million barrels a day this year and 1.3 million the next, above earlier estimates of 1.8 million and 1.1 million barrels a day, respectively. The revision follows OPEC+'s latest supersize output hike, though countries outside of the alliance remain the primary drivers of growth.
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Supply surged by 950,000 barrels a day last month, led by Saudi Arabia's output boost as several Gulf producers ramped up exports during the Israel-Iran conflict due to fears of supply disruptions in the Strait of Hormuz.
Despite these large increases, seasonal factors are tightening the market in the short term, the IEA said. Futures markets remain in steep backwardation–where near-term prices exceed later-dated contracts–and summer travel demand is keeping refining margins healthy.
However, the implied global stock build of 1.74 million barrels a day in the second quarter doesn't fully reflect actual market availability. Much of the build is concentrated in China and the U.S., where strategic stockpiling and temporary export constraints limit availability to the broader market, according to the agency.
OPEC+–which produces more than half of the world's crude oil–accounted for 1.9 million barrels a day of the 2.9 million barrel-a-day global output growth seen in June. The alliance agreed to accelerate its production hikes for a fourth consecutive month in August, fueling concerns about a supply glut in the coming months.
However, the IEA said the decision 'failed to move markets in a meaningful way given tighter fundamentals.' Plus, given current compliance levels and compensation cuts for overproduction, the agency doesn't anticipate significant supply increases in July.
Friday's report came as Brent crude trades at $69 a barrel, while West Texas Intermediate is at $67 a barrel, as uncertainty over U.S. tariffs and concerns about oversupply continue to weigh on sentiment.
The IEA lowered its oil-demand growth forecast for this year to 704,000 barrels a day from 724,000 previously. Except for 2020, when Covid-19 hit, that would mark the lowest growth rate since 2009.
Consumption growth slowed sharply in the second quarter–rising by just 550,000 barrels a day from 1.1 million barrels a day in the previous quarter. The deceleration was partly due to weather dynamics, as colder winter temperatures boosted demand in OECD countries in the first quarter of the year.
Still, the agency flagged a more pronounced slowdown in developing countries. While it might be premature to link slower growth with the impact of U.S. tariffs, the sharpest declines were seen in countries hit hardest by trade restrictions, it said.
Next year, oil demand is forecast to grow by 722,000 barrels a day from previous estimates of 739,000 barrels a day. The IEA's projections remain well below OPEC's, as the cartel forecasts global oil-demand growth of around 1.3 million barrels a day for both this year and next.
Write to Giulia Petroni at
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