Oil supply set to outstrip demand growth, IEA says
By Josh White
Date: Tuesday 17 Jun 2025
(Sharecast News) - Global oil supply is expected to grow significantly faster than demand through the end of the decade, according to the International Energy Agency's latest medium-term outlook, Oil 2025, released on Tuesday.
The report highlighted a major structural shift in global energy markets as the key drivers of oil growth - Chinese consumption and US shale expansion - start to fade.
Oil demand was forecast to rise by 2.5 million barrels per day between 2024 and 2030, reaching a plateau of around 105.5 million barrels per day.
Over the same period, global production capacity was projected to climb by more than five million barrels per day to 114.7 million daily barrels, led by growth in natural gas liquids and other non-crude outputs.
That widening gap reflected slowing demand growth and an increasingly diversified supply base, the IEA said.
China, long the engine of oil consumption, was expected to see demand peak in 2027 due to rapid adoption of electric vehicles and alternative transport solutions.
Meanwhile, US oil supply growth was slowing as producers shifted toward financial discipline, though the country remained the largest source of non-OPEC output growth.
The IEA saw output from the US, Canada, Brazil, Guyana and Argentina more than covering projected global demand increases, especially as OPEC+ started unwinding production cuts.
Barring major disruptions, the report foresaw a well-supplied oil market through 2030, though geopolitical tensions and economic uncertainty continue to pose risks.
Electric vehicle sales hit a record 17 million in 2024 and were on track to exceed 20 million in 2025 - a trend that was expected to displace 5.4 million barrels of oil demand per day by the end of the decade.
The Middle East's transition from oil to gas and renewables for power generation was also weighing on demand.
Petrochemicals were set to become the main driver of oil use from 2026, the IEA explained, with the sector projected to consume one in every six barrels by 2030.
As a result, demand for oil used in combustion could peak as early as 2027.
That shift towards non-refined liquids was expected to put pressure on the refining sector, with overcapacity likely to lead to closures in the years ahead.
"When we look at oil market trends over the past decade, we see a remarkable double act - thanks to the shale revolution, the United States has accounted for 90% of oil supply growth worldwide, while 60% of the rise in global demand has come from China," said IEA executive director Fatih Birol.
"But these dynamics are shifting. Based on the fundamentals, oil markets look set to be well-supplied in the years ahead - but recent events sharply highlight the significant geopolitical risks to oil supply security."
Birol said that when it comes to energy security, there was "no room for complacency".
"The IEA remains deeply committed to working with energy producers and consumers to safeguard energy security."
Reporting by Josh White for Sharecast.com.
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