The global oil market is set to experience a significant surplus next year, despite OPEC+ delaying its planned production increases, the International Energy Agency (IEA) said on Thursday.
OPEC+ announced last week that it would postpone easing its 2.2 million barrels per day (bpd) production cuts from January 2025 to April 2025. The group also extended the timeline for unwinding these cuts until September 2026.
While this decision has reduced the expected supply surplus for next year, the IEA noted that increased production within OPEC+ and strong growth from non-OPEC+ producers will still leave the market well-supplied in 2025. This outlook is outlined in the IEA’s December Oil Market Report.
The IEA’s latest forecasts exclude any additional supply from OPEC+ due to ongoing uncertainties. Even if OPEC+ maintains current production levels throughout 2025, the market will face a surplus of 950,000 bpd. If the group begins easing its cuts by March 2025, the surplus could grow to 1.4 million bpd, according to the agency.
A major factor influencing OPEC+ supply is the level of compliance with agreed production targets. The IEA highlighted that in November, OPEC+ output was 680,000 bpd above its targets.
Global oil demand is expected to rise by 1.1 million bpd in 2025, reaching 103.9 million bpd, based on the IEA’s latest projections. However, supply will outpace demand. Total oil supply is set to increase by 1.9 million bpd to 104.8 million bpd in 2025, even without the easing of OPEC+ cuts.
Non-OPEC+ production will contribute significantly to this growth, with supply expected to increase by around 1.5 million bpd in both 2024 and 2025. The main contributors to this rise include the United States, Brazil, Guyana, Canada, and Argentina, the IEA said.
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