The International Energy Agency (IEA) has warned that in 2025, supply may outpace demand in the global oil market. According to the agency's November oil market report, there could be a surplus of more than 1 million barrels of oil per day next year.
The main reason for this oversupply is China's weak economy. Oil demand in the world's second-largest economy fell steadily in the half year ending in September. According to IEA data, the 'main pressure' on global oil demand this year was a decline in Chinese demand.
On the other hand, oil production is growing rapidly in non-OPEC countries, led by countries such as the United States, Guyana, Argentina and Brazil. Non-OPEC countries are collectively on track to increase oil production by 1.5 million barrels per day, according to the IEA's forecast. This is higher than the company's global oil consumption growth forecast (990,000 barrels per day).
OPEC Plus, the Saudi-led oil producer group, has been reconsidering its decision to cut production by 2.2 million barrels a day in recent years to ease pressure on supplies. The group said that they may start working on increasing the production quota from next January.
The IEA said in its latest analysis that even if OPEC Plus continues to cut production, there will be a surplus of more than 1 million barrels per day of global supply over demand next year. However, given the volatility in the market due to the Covid pandemic, Russia's invasion of Ukraine and recent unrest in the Middle East, a looser supply scenario could bring much-needed stability back to the market.
The United States has been the world's largest oil producer for the past six years. US domestic production hit a record 13.4 million barrels per day in August, according to data from the US Energy Information Administration.
