IEA trims 2025 oil demand growth estimate to 980,000 b/d on post-pandemic normalization

The International Energy Agency on July 11 trimmed its estimate of growth in global oil demand in 2025 by 50,000 b/d to 980,000 b/d, citing "normalisation" of demand trends following the pandemic, with China losing its pre-eminence.

For 2024, the IEA kept its oil demand growth estimate virtually unchanged compared with its last monthly oil market report, at 970,000 b/d, but said global oil demand growth was just 710,000 b/d in the second quarter, the slowest increase since Q4 2022.

"This deceleration primarily reflects a normalisation of growth rates back to the 2010s trend, with an end to the pandemic-related fluctuations of recent years. Consumption gains of 970,000 b/d in 2024... are close to the level implied by GDP growth," it said.

It added that China's oil consumption had slipped year-on-year in the second quarter of 2024. Contractions in China's oil demand in both April and May stand "in stark contrast to annual gains of 1.5 million b/d in 2023 and 740,000 b/d in Q1 2024," it said.

Supply outlook

On the supply side, the IEA raised its estimate for oil production by the non-OPEC+ countries in 2024 from 1.4 million b/d to 1.5 million b/d on the back of an upward revision in its US production growth estimate to 740,000 b/d.

Reflecting these trends, the IEA lowered its estimates of the "call" for OPEC+ crude by 200,000 b/d for both the third and fourth quarters of 2024, to 42.2 million b/d and 41.8 million b/d respectively.

The IEA's oil demand growth forecasts stand in stark contrast with a more bullish monthly report from OPEC published July 10, which put demand growth at 2.25 million b/d in 2024, and 1.85 million b/d in 2025, although the organization did lower its estimates for the call on OPEC+ crude for both years.

Prices have rallied in recent weeks, partly on the back of the seasonal uptick in northern hemisphere demand. Dated Brent crude is up 12% since early June to $86.08/b on July 10, according to assessments by Platts, part of S&P Global Commodity Insights.