The International Energy Agency (IEA) reported that global oil supply may exceed demand by approximately 600,000 barrels per day (bpd) this year. The forecast for world oil demand growth in 2025 is now estimated at 1.03 million bpd, down from the previous 1.10 million bpd.
A surplus could increase by 400,000 bpd if OPEC+ continues its output cuts unwinding. The United States is projected to be the largest contributor to supply growth in 2025, with a rise of 240,000 bpd observed in global supply during February.
Opec Plus Production Adjustments
OPEC+ might increase the market by only 40,000 bpd in April, rather than the anticipated 138,000 bpd. The IEA has revised its 2025 non-OPEC+ supply growth estimate to 1.5 million bpd from 1.4 million bpd.
The outlook shared by the International Energy Agency makes it clear that global oil markets are on track to experience more supply than demand this year. If that balance holds, those engaged in energy markets should be mindful of possible downward pressure on prices. When supply consistently exceeds consumption, it tends to weigh on market sentiment, making long positions riskier unless specific conditions shift.
With demand growth estimates revised lower for next year, we must consider why expectations have changed. A revision from 1.10 million barrels per day to 1.03 million suggests that forecasters see lower consumption across industries or regions previously expected to drive growth. Whether this stems from weaker economic activity or a push toward alternative energy remains uncertain, but it does suggest there is less urgency for producers to ramp up output.
When looking at production trends, the rollback of earlier cuts by the alliance of oil-producing nations could add hundreds of thousands of barrels per day back into the market. This would only deepen any surplus, raising the question of whether they will maintain their cautious approach or release supplies more aggressively. Meanwhile, reports indicate that the United States, a key player outside of the agreement, continues to bring more barrels online. An increase of 240,000 barrels per day in February reinforces the trend that American producers are steadily expanding output levels.
Future Supply And Price Implications
The adjustment in how much will be added to global supply next month provides another layer of insight. If just 40,000 barrels per day enter the market instead of the expected 138,000, this leaves less of an immediate impact than initially thought. However, the longer-term forecast for 2025 shows an upward revision in non-alliance production growth, from 1.4 million to 1.5 million barrels per day. This subtle upward shift indicates that more output could come online from sources outside the producer coalition.
Taken together, these factors suggest a market that is gradually tilting away from a tight supply environment. For those involved in derivatives trading, interpreting how these shifts might influence short-term and long-term price action will be key. If demand projections do not improve and unwinding of production cuts progresses, market participants relying on scarcity to drive prices upward may need to reassess.
