The International Energy Agency (IEA) has warned that rising global oil production, led by Saudi Arabia, is set to collide with weakening demand in the final quarter of 2025, particularly in Asia. The Paris-based agency revised its forecast for global oil demand growth this year to 680,000 barrels per day, a third lower than its January projection and the slowest pace outside the Covid-19 slump since 2009.
The IEA cited slowing consumption in China, India, and Brazil, noting that all three nations face potential high tariffs on trade with the United States. “After two years of relative balance, supply is now running well ahead of requirements,” the agency said, warning of a potential “large overhang in the market.”
OPEC continues to increase production, and the IEA now expects global supply to grow by 2.5 million barrels per day in 2025—about 30% higher than its estimate at the start of the year. Much of the early-year surplus flowed into storage, with China absorbing over 90% of the second-quarter increase.
Looking ahead, the IEA expects a persistent surplus of around 2 million barrels per day from autumn into 2026, following record refinery activity over the summer to meet fuel demand. However, the agency cautioned that the short-term oversupply outlook could shift if the United States tightens sanctions on Russia or Iran, the world’s third- and fifth-largest oil producers.
The IEA’s forecast contrasts with OPEC’s latest monthly report, released on Tuesday. OPEC raised its demand estimate for 2025 while lowering its projections for production growth in the U.S. and other non-OPEC producers. The cartel predicts oil demand will increase by 1.38 million barrels per day in 2026—nearly double the IEA’s forecast.
