Review of Oil and Gas Prices: Q2 2025 Analysis
Global Oil Market Forecast: Moderate Growth and Potential Surplus Through 2030
The International Energy Agency (IEA) has released its latest report, "Oil 2025: Analysis and Forecast to 2030," which projects a moderate growth in global oil demand, with a gradual increase through 2030, before leveling off near 105.5 million barrels per day (bpd).
According to the report, demand growth is expected to slow to about 680,000 bpd year-on-year in 2025, primarily due to weaker economic conditions and shortfalls in non-OECD countries like China, India, and Brazil. Growth of around 700,000 bpd is forecast for 2026, maintaining a slower pace compared to previous years. After that, demand is anticipated to continue rising more gradually, increasing by approximately 2.5 million bpd from 2024 to 2030 before stabilizing.
On the supply side, the IEA anticipates a substantial increase in global oil supply, with non-OPEC producers (notably the U.S., Canada, Brazil, and Guyana) leading the growth through increased production, even as OPEC+ raises output. Supply is expected to increase by about 2.5 million bpd in 2025 and by an additional 1.9 million bpd in 2026. This expansion may lead to a surplus, with supply potentially exceeding demand by nearly 3 million bpd in 2026, causing market imbalances that the IEA notes will require adjustments to rebalance.
The report also highlights that electric vehicles (EVs) are expected to displace roughly 5.4 million bpd by 2030, but this impact is partially offset by robust demand for petrochemical feedstocks like plastics and industrial uses. Economic and geopolitical factors, including US trade tariffs on key emerging markets and sanctions on Russia and Iran, are influencing both demand and supply dynamics.
Despite slower demand growth compared to historical trends, global crude oil refining rates are projected to reach new highs near 85.6 million bpd by August 2025, reflecting sustained consumption. Global strife and potential supply constraints are adding support to oil prices as they approach year-to-date highs.
Natural gas liquids (NGLs) are emerging as a major driver of global oil supply growth through the end of the decade, with output forecast to rise by 2 mb/d to 15.5 mb/d by 2030. Ethane demand alone is expected to climb by 610,000 b/d to 5.2 mb/d by 2030, while liquefied petroleum gas (LPG) consumption is forecast to rise by 1.3 mb/d to 11.8 mb/d. Saudi Arabia is set to boost production from 1.4 mb/d to 2 mb/d over the same timeframe, while Canada will add 300,000 b/d.
In summary, the IEA forecasts a moderate slowing in oil demand growth from 2025 through 2030 with demand stabilizing around 105.5 million bpd, while supply is expected to keep rising, potentially leading to surplus conditions that will necessitate market adjustments. This outlook reflects a complex balance between slowing economic growth in non-OECD nations, rising production primarily outside OPEC, increasing electrification, and ongoing geopolitical risks.
- The surplus in global oil supply, expected to occur in 2026, may lead to market imbalances and necessitate adjustments, particularly among industries that rely heavily on oil for their finance.
- If the projected increase in natural gas liquids (NGLs) materializes, the energy sector could witness significant changes, with subsequent impacts on various industries that rely on oil for their operations.
