The International Energy Agency scaled up its forecast for global oil supply in 2025, citing higher production by the Organization of the Petroleum Exporting Countries and allies.
Supply outlook
The Paris-based energy agency has revised upward its 2025 supply growth forecast by 370,000 barrels per day (bpd) from the previous month, according to the IEA’s August Oil Market Report.
The agency now sees global crude oil supply rising by 2.5 million bpd in 2025.
The IEA also scaled up its forecast for oil supply growth in 2026 by 620,000 bpd from the previous month.
It now sees supply rising by a further 1.9 million bpd next year.
On August 3, the eight OPEC+ members voluntarily agreed to increase oil production by 547,000 bpd in September.
This move fully reverses the 2.2 million bpd output cuts that were implemented in November 2023 and have been in effect since April.
OPEC+ is projected to contribute 1.1 million bpd to crude and NGLs supply growth this year, followed by 890,000 bpd in 2026, according to IEA.
Non-OPEC+ producers are projected to drive growth, adding 1.3 million bpd in 2025 and 1 million bpd in 2026, even with substantial OPEC+ gains.
This growth will be supported by increased output from US NGLs, Canadian crude, and offshore oil from the US, Brazil, and Guyana, the agency said.
Demand forecasts
Global oil demand is expected to increase by approximately 700,000 bpd in both the current year and the next.
This projection for 2025 has seen multiple downward revisions since the beginning of the year, totaling a combined decrease of 350,000 bpd.
The agency said:
The latest data show lacklustre demand across the major economies and, with consumer confidence still depressed, a sharp rebound appears remote.
Previously projected consumption levels in emerging and developing economies, including China, Brazil, Egypt, and India, have been adjusted downwards in this month’s Report due to weaker-than-anticipated performance.
Robust summer travel has led to record-high jet fuel demand in the United States and Europe, making aviation an exception to general trends.
Refining activity
“So far, the market has absorbed the additional barrels as refinery activity reached an all-time high and China boosted stock holdings,” IEA said.
Global observed oil inventories increased by 1.5 million bpd in the second quarter of 2025. This build was driven by a 900 kilobarrels per day (kbpd) rise in Chinese crude stocks and another 900 kbpd increase in US gas liquids.
Nonetheless, crude and product stocks in major pricing hubs remain well below historical averages.
In August, global crude runs are projected to reach a record 85.6 million bpd, according to IEA’s estimates.
This signifies robust annual growth of 1.6 million bpd in the third quarter of 2025, a significant increase compared to the average rise of merely 130,000 bpd observed in the first half of the year.
Market balances
“While oil market balances look ever more bloated as forecast supply far eclipses demand towards year-end and in 2026, additional sanctions on Russia and Iran may curb supplies from the world’s third and fifth largest producers,” IEA said.
In a significant move, the US Department of the Treasury announced its most impactful Iran-related sanctions since 2018 at the end of July.
These measures are designed to hinder Iran’s ability to sell its oil.
Washington is increasing pressure on major importers of Russian crude oil, particularly India, to reduce their purchases.
As of January 2026, the European Union will prohibit the import of oil products refined from Russian crude oil.
Additionally, as part of its 18th sanctions package against Moscow, a reduced price cap for Russian oil will be implemented starting September 3.
In a contrasting move, restrictions on Venezuela have been relaxed, with Chevron recently receiving a new license to operate and export oil.
While it is still too early to determine the outcome of these latest policy changes moving in different directions, it is clear that something will have to give for the market to balance.
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