Global Oil Market Facing Surplus in 2025 Due to Weakening Chinese Demand, Says IEA
The International Energy Agency has predicted a significant surplus in global oil markets next year, attributing it to the continued decline in Chinese demand. Despite OPEC+ cuts remaining in place, the IEA’s latest report indicates that global supply is expected to exceed demand by more than one million barrels per day.
China’s economic slowdown has been a major factor in the reduced demand for oil, with growth expected to be just a fraction of previous years. In contrast, advanced economies have seen an increase in oil demand in the third quarter of 2024.
The decision by OPEC+ to postpone a scheduled output increase has helped prevent an even greater surplus in the market. The alliance will convene in December to review production policies for the upcoming year.
On the supply side, the IEA notes that world oil production is growing steadily, with the United States expected to lead non-OPEC+ supply growth in the coming years. Despite concerns about the global economy and ample supply, oil prices have slightly rebounded in recent weeks.
Current oil prices stand at $73.03 a barrel for Brent crude and $69.19 a barrel for West Texas Intermediate.
In summary, the global oil market is expected to experience an oversupply in 2025 due to weakening demand from China. This surplus is likely to be mitigated by OPEC+ cuts and the decision to delay a scheduled output increase. The United States is anticipated to lead non-OPEC+ supply growth, offsetting the expected demand growth in the coming years. Despite concerns about the global economy, oil prices have seen a slight increase in recent weeks. This information can impact global oil markets, influencing prices and investment decisions for individuals and businesses involved in the industry.