The International Energy Agency (IEA) has revised its global oil demand outlook downward, citing growing economic uncertainty and record-breaking electric vehicle (EV) sales as key factors slowing consumption growth.
In its May Oil Market Report, the IEA said oil demand increased by 990,000 barrels per day (bpd) in the first quarter of 2025.
However, growth is expected to slow sharply to just 650,000 bpd for the rest of the year. For the full year, demand is now forecast to rise by 740,000 bpd, slightly up from last month’s estimate of 730,000 bpd but still significantly lower than earlier projections.
The agency had already slashed its April forecast by 300,000 bpd following the United States’ tariff hikes in early April, which triggered global trade tensions.
Although the U.S. and China have recently taken steps toward easing those tensions, the IEA warns that ongoing trade uncertainty is likely to weigh on global economic activity and oil demand alike.
Looking ahead, the IEA expects 2026 demand growth to remain subdued at around 760,000 bpd, aligning closely with the 2025 outlook.
“Recent data from major consumers like China and India suggest the slowdown may already be underway,” the agency noted, highlighting weaker-than-expected figures from both countries.
On the supply side, the IEA cut its forecast for U.S. shale output for a second straight month, citing falling oil prices, lower capital investment, and reduced rig activity.
Similarly, OPEC on Wednesday trimmed its outlook for supply growth from non-OPEC+ producers, including the U.S. It now expects an 800,000 bpd increase in 2025, down from last month’s estimate of 900,000 bpd.
Together, the latest IEA and OPEC assessments point to a period of softer oil demand growth and more cautious supply expansion, as the global energy landscape adjusts to shifting market dynamics.
