IEA raises 2025 oil supply forecast after OPEC+ output hike decision

The International Energy Agency (IEA) has updated its oil market outlook, raising its 2025 supply growth forecast to 2.5 million bpd following OPEC+ production hikes, while simultaneously lowering its 2024 demand growth projection to 680,000 bpd due to lacklustre demand across major economies. This revised assessment, which briefly extended oil price losses, indicates a market facing increased supply potential amidst weakening consumption, though global refining runs are still projected to approach an all-time high of 85.6 million bpd in August.

Analysis

The latest International Energy Agency (IEA) report indicates a loosening of the global oil market, presenting a bearish outlook for crude prices. The agency has upwardly revised its 2025 world oil supply growth forecast to 2.5 million barrels per day (bpd), citing increased production from OPEC+ and continued growth from non-OPEC producers. Concurrently, the IEA has lowered its 2024 world oil demand growth forecast to 680,000 bpd, attributing the downgrade to "lacklustre demand across the major economies" and depressed consumer confidence. The market's immediate reaction, with oil prices extending losses post-publication, confirms the negative interpretation of this widening supply-demand gap. A notable counter-signal, however, is the projection that global oil refining runs will approach an all-time high of 85.6 million bpd in August, suggesting robust near-term demand for refined products which could provide temporary price support before the weaker fundamental outlook takes hold.

Key Decisions for Investors

• Given the forecast of rising supply and weakening demand growth, investors with long exposure to crude oil should re-evaluate medium-term price expectations and consider hedging against potential downside.
• The projection for near-record refinery runs in August could create short-term price support, presenting a potential tactical opportunity for traders before the broader bearish fundamentals likely reassert themselves.
• Investors should closely monitor leading economic indicators and consumer confidence data from major economies, as the IEA has explicitly identified these as the primary drivers behind the weakened demand outlook.