The International Energy Agency (IEA) has raised its forecasts for oil demand growth for the current and next year, expecting global GDP growth of 2.8% in 2025 and 2026.
According to the May report published on Thursday, the agency increased its oil demand growth forecast for 2025 to 740,000 barrels per day this year, up from the previous 730,000 barrels per day, and to 760,000 barrels per day in 2026, up from the previously expected 690,000 barrels per day.
The agency also raised its forecast for global supply growth to 1.6 million barrels per day in 2025 and 970,000 barrels per day in 2026, up from 1.2 million and 960,000 barrels per day respectively in the previous report.
Producers outside of OPEC+ are expected to add 1.3 million barrels per day this year, supported by strong production from China, Canada, and Brazil, while the OPEC+ coalition will add 310,000 barrels per day of oil supply.
The report noted that the recent decline in oil prices will limit U.S. shale oil production. The agency cited some companies’ plans to reduce the number of drilling rigs and cut up to 9% of their previously estimated capital expenditures for 2025.
As a result, the IEA lowered its forecasts for U.S. light shale oil production for the second consecutive month, by 40,000 barrels per day in 2025 and 190,000 barrels per day in 2026
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