IEA: Oil supply growth set to outpace demand
The new medium-term outlook sees China’s oil use peaking, EVs surging, and supply remaining secure despite geopolitical risks.
Amid escalating geopolitical tensions and an uncertain global economy, the world’s oil markets are entering a new phase as the forces that have driven supply and demand over the past 15 years begin to shift, according to the International Energy Agency’s (IEA) latest medium-term report, Oil 2025.
The IEA forecasts that global oil production capacity will rise significantly faster than demand through the end of the decade, driven by strong growth in natural gas liquids and other non-crude supplies. Production capacity is projected to increase by over 5 million barrels per day (mb/d) to reach 114.7 mb/d by 2030, while demand is expected to grow by only 2.5 mb/d, leveling off at around 105.5 mb/d.
A key change is China’s oil demand, which has accounted for much of global consumption growth for more than a decade. The IEA now expects China’s oil use to peak in 2027, driven by rapid adoption of electric vehicles, expanded high-speed rail, and the shift to natural gas for freight transport.
Meanwhile, U.S. oil production, the main engine of global supply growth thanks to the shale boom, is forecast to continue rising but at a slower pace as companies prioritize financial discipline. Despite this moderation, the United States will remain the largest source of non-OPEC supply growth, alongside gains from Canada, Brazil, Guyana and Argentina.
The report highlights that rising electric vehicle sales — expected to exceed 20 million in 2025 — will displace 5.4 mb/d of oil demand by 2030. The use of natural gas and renewables in the Middle East for power generation will also curb demand for oil.
By 2026, the petrochemical industry is set to become the dominant source of oil demand growth, projected to consume one in every six barrels by 2030. Despite recent geopolitical events, such as heightened tensions involving Israel and Iran, the IEA expects the oil market to remain comfortably supplied through 2030, barring major disruptions.
