The International Energy Agency (IEA) and the U.S. Energy Information Administration (EIA) have sharply lowered their forecasts for oil demand growth in 2025. The move comes as trade tensions between the United States and China escalate. OPEC also trimmed its demand forecasts but remains more optimistic than the other two organizations. All three groups pointed to the negative impact of U.S. tariffs as the main reason for their revisions.
In its April “Oil Market Report,” the IEA cut its 2025 demand growth estimate by 300,000 barrels per day (b/d) compared to March. It now expects demand to grow by just 730,000 b/d next year, citing the impact of rising trade tensions on the global economy.
Several factors have pushed oil prices lower in recent weeks, including reciprocal tariffs announced by President Donald Trump on April 2, a weaker U.S. dollar, volatility in financial markets, and increased oil supply from OPEC+. Brent crude futures fell below $68 per barrel on April 17 after starting the month above $70 and briefly dipping below $60 following the announcement of new tariffs. While prices have recovered somewhat, they remain under pressure due to fears of a global recession and little progress in resolving the U.S.-China trade conflict.
Oil prices rebounded slightly on April 9 after Trump announced a 90-day delay on some planned tariffs, but he raised tariffs on Chinese goods to 145%. In response, China imposed a 125% tariff on U.S. products. Chinese officials have stated they will not back down from the trade dispute.
According to the IEA, about half of the downgrade in demand is tied to the United States and China, with most of the rest affecting trade-driven Asian economies. As the world’s largest crude importer, any slowdown in China’s economy could hit oil demand and affect major exporters like Gulf Arab states. The IEA noted that despite a strong first quarter in 2025, with demand growing by 1.2 million b/d, the outlook has worsened.
The IEA also issued its first forecast for 2026, projecting slower demand growth of 690,000 b/d. It warned that risks to the forecast remain high due to rapid changes in the global economy. While lower oil prices could boost demand, they are unlikely to fully offset the weaker economic outlook.
The EIA projected an even steeper cut in its April 10 “Short-Term Energy Outlook.” It reduced its 2025 demand growth forecast by 400,000 b/d but still expects overall growth to reach 900,000 b/d, higher than the IEA’s figure. The EIA also lowered its 2026 growth forecast by 100,000 b/d to 1 million b/d. However, it emphasized the uncertainty of its estimates, noting that the full impact of tariffs on the economy and oil demand remains unclear.
Both the IEA and EIA noted that oil supply is set to increase after eight OPEC+ members announced production hikes starting in April and May. The EIA expects global oil inventories to rise by mid-2025, driven by higher production from OPEC+ and non-OPEC countries and slowing demand growth. As a result, it forecasts Brent crude prices to average $68 per barrel in 2025 and fall to $61 per barrel in 2026. These are $6 and $7 lower, respectively, than its previous estimates.
OPEC remains more positive despite also lowering its forecasts. In its “Monthly Oil Market Report,” OPEC cut its 2025 demand growth forecast by 150,000 b/d to 1.3 million b/d and sees 2026 growth at 1.28 million b/d—figures much higher than those from the IEA and EIA.
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