IEA raises oil demand growth forecast

Oil drilling rigs

The International Energy Agency (IEA) raised its forecasts for oil demand growth, projecting higher figures for both the current and upcoming years. Meanwhile, refinery output projections remain largely consistent with last month’s report.

In its May report published today, May 15, the agency increased its forecast for oil demand growth in 2025 to 740,000 barrels per day (bpd), up from the previously estimated 730,000 bpd. For 2026, the forecast was increased to 760,000 bpd from the earlier projection of 690,000 bpd.

The IEA raised its forecasts for global supply growth in 2025 to 1.6 million bpd and 970,000 bpd in 2026, up from 1.2 million and 960,000 bpd, respectively, in the previous report.

Producers outside the OPEC+ alliance are expected to add 1.3 million bpd this year, supported by strong output from China, Canada, and Brazil, while OPEC+ countries will contribute an additional 310,000 bpd.

The report noted that the recent decline in oil prices will limit US shale oil production. The agency cited some companies' plans to reduce the number of drilling rigs and cut up to 9% of their previously estimated 2025 capital expenditures.

As a result, the IEA lowered its US light tight oil (LTO) production forecast for the second consecutive month, by 40,000 bpd in 2025 and 190,000 bpd in 2026.