Finance
Global oil supply to rise faster than expected after OPEC+ hike, IEA says
Published by Global Banking & Finance Review®
Posted on May 15, 2025
4 min readLast updated: January 23, 2026
Global Banking & Finance Review®
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Published by Global Banking & Finance Review®
Posted on May 15, 2025
4 min readLast updated: January 23, 2026
The IEA forecasts a faster rise in global oil supply as OPEC+ unwinds cuts, affecting oil prices and demand growth.
By Robert Harvey and Enes Tunagur
LONDON (Reuters) -World oil supply will rise more rapidly than previously expected this year as Saudi Arabia and other OPEC+ members unwind output cuts, the International Energy Agency (IEA) said on Thursday, despite a lower forecast from U.S. shale producers.
The IEA expects global supply to rise by 1.6 million barrels per day this year, up 380,000 bpd from the previous forecast, the agency, which advises industrialised countries, said in a monthly report.
OPEC+ is adding more crude to the market after the group decided to unwind its most recent layer of output cuts in May and June more rapidly than earlier scheduled. The extra supply, along with concern about President Donald Trump's tariffs, helped send oil prices to a four-year low earlier this month.
Even though the IEA made a small 20,000 bpd increase to its forecast for oil demand growth this year to 740,000 bpd, the pace of growth will slow in the rest of the year to 650,000 bpd, it said, from 990,000 bpd in the first quarter.
"Signs of a slowdown in global oil demand growth may already be emerging," the IEA said, adding that economic headwinds combined with record sales of electric vehicles (EVs) are dampening demand.
Saudi Arabia is the only country with room to add barrels back to the market based on current production levels, the IEA said, after the OPEC+ group agreed a second monthly accelerated output increase for June at its last meeting.
Total oil demand will average 103.90 million bpd this year, the IEA said, an upward revision from 103.54 million bpd last month, citing updates to historical demand estimates for some countries including Egypt and Nigeria, in addition to the 20,000 bpd hike in its demand growth forecast.
Even after these changes, the IEA's projection of the surplus in the global market does not change much, rising to about 730,000 bpd based on Reuters calculations in the report, slightly larger than last month's 710,000 bpd.
Next year, IEA sees demand growth averaging 760,000 bpd, with supply growth rise by 970,000 bpd, also implying a surplus.
LOWER PRICES IMPACT SHALE, OTHERS
Also in the report, the IEA revised down its forecast for U.S. shale oil growth by 40,000 bpd in 2025, and by 190,000 bpd in 2026 citing lower prices.
"One of the most immediate impacts of the recent slump in oil prices is expected to fall on U.S. shale output," it said.
"We expect more activity cuts over the coming quarters," it said, adding that large independent shale players have already announced 14 rig cuts for this year.
On Wednesday, the Organisation of Petroleum Exporting Countries (OPEC) trimmed its forecast for oil supply growth from the U.S. and other producers outside the wider OPEC+ group for 2025.
Lower oil prices are also affecting Russia, the IEA said, as monthly oil revenues declined to their lowest since June 2023 at $13.2 billion in April.
Russia's revenues fell despite production rising by 170,000 barrels per day on the month to 9.3 million bpd, and exports by 150,000 bpd to 7.6 million bpd, according to the IEA.
RECORD EV SALES HITS DEMAND OUTLOOK
Electric car sales will exceed 20 million in 2025 and account for around a quarter of global car sales, the IEA said, marking back-to-back annual records on surging sales in China.
EV sales in China alone will hit 14 million in 2025, the IEA said.
Despite rising EV sales, the IEA reduced its forecast for oil demand displacement to 5 million bpd by 2030 in its 2025 EV outlook report, down from 6 million bpd in the previous report. EVs' oil displacement was around 1.3 million bpd in 2024.
(Reporting by Robert Harvey and Alex Lawler in London; Editing by Tomasz Janowski, Jan Harvey and David Evans)
The article discusses the IEA's forecast of a faster rise in global oil supply due to OPEC+ actions.
The IEA revised down its U.S. shale oil growth forecast due to lower oil prices.
Record EV sales are reducing oil demand growth, affecting future oil market projections.
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