Global Oil Demand to Surpass Supply in 2025-EIA Reports

The U.S. Energy Information Administration (EIA) has revised its oil demand and supply forecast, now predicting a deficit rather than a surplus. According to the latest forecast, global oil demand is expected to outpace supply next year.

This shift follows the Organization of Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, extending most of their deep oil output cuts into next year at a recent meeting. The group has been restricting output since late 2022 to support oil markets amid weakening demand growth, high interest rates, and record U.S. output.

If the market goes into a deficit, refiners will need to draw oil from inventories to meet demand. The deficit is projected to be smaller next year compared to this year, according to the EIA. The latest forecast indicates that global oil demand will average about 104.7 million barrels per day (bpd) next year, while supply will be around 104.6 million bpd.

In its previous forecast, the EIA estimated global demand at around 104.5 million bpd and supply at 104.7 million bpd. The reduced OPEC+ output is expected to deepen the supply deficit through the rest of this year, with world oil demand exceeding output by around 750,000 barrels per day in the second half of 2024, based on the EIA’s outlook.

Earlier forecasts indicated a smaller deficit of about 550,000 bpd in the second half of this year. Withdrawals from global inventories are expected to push oil prices higher, with global benchmark Brent crude prices averaging $89 per barrel in the second half of this year, up from $84 per barrel in the first half.

The market could shift back to a surplus from the third quarter of next year if OPEC+ unwinds production cuts. The group announced last month that it would gradually unwind some voluntary cuts starting in October.

“We anticipate that the market will gradually return to moderate inventory builds in 2025 after the expiration of voluntary OPEC+ supply cuts in Q4 2024 and after forecast supply growth from countries outside of OPEC+ begins to offset growth in global oil demand,” the EIA stated.

The U.S. oil output is expected to grow by 320,000 barrels per day this year to a record of 13.25 million bpd, slightly higher than the previous forecast of 13.24 million bpd, the EIA reported.