The IEA sees a slightly tighter oil market this year than it previously forecast and said new US sanctions on Russia and Iran could further squeeze balances.
The outgoing administration of US President Joe Biden announced additional sanctions on Russia's energy exports earlier this month, and moved to tighten sanctions on Iran's oil exports in December.
"We maintain our supply forecasts for both countries until the full impact of sanctions becomes more apparent, but the new measures could result in a tightening of crude and product balances," the IEA said today in its latest monthly Oil Market Report (OMR).
But the effect of incoming US President Donald Trump on Russian and Iranian supply remains a key variable.
As things stand, the IEA projects a 720,000 b/d supply surplus this year — showing a well cushioned oil market. This is around 230,000 b/d less than its previous forecast. For 2024, the IEA's balances show a small supply surplus of 20,000 b/d.
The Paris-based agency sees global oil supply growing by 1.8mn b/d to 104.7mn b/d in 2025, compared to growth of 1.9mn b/d in its December report. Almost all of the 2025 growth — 1.5mn b/d — will come from non-Opec+ countries such as US, Brazil, Guyana, Canada and Argentina.
The IEA continues to assume all current Opec+ cuts will remain in place this year, although the alliance plans to start increasing output from April.
The IEA said global oil supply grew by 650,000 b/d in 2024.
The agency sees global oil demand growing by 1.05mn b/d in 2025, down by 30,000 b/d from its December forecast. This should see oil demand reach 104.0mn b/d, with most of the gains driven by "a gradually improving economic outlook for developed economies, while lower oil prices will also incentivise consumption."
China, which has long driven global oil demand growth but whose economy is now slowing, will add 220,000 b/d in 2025, compared with 180,000 b/d in 2024 and 1.35mn b/d in 2023.
But the IEA revised up its oil demand growth estimates for 2024 by 90,000 b/d to 940,000 b/d. This was mostly due to better-than-expected growth in the fourth quarter, which at 1.5mn b/d was highest since the same period in 2023 and 260,000 b/d above than its previous forecast. This increase was mostly due to lower fuel prices, colder weather and abundant petrochemical feedstocks, the IEA said.
The IEA said global observed oil stocks increased by 12.2mn bl in November, with higher crude stocks on land and water offsetting refined product draws. It said preliminary data show a further stock build in December.
