Surplus oil supply likely in 2025: IEA

The International Energy Agency (IEA) headquarter

The International Energy Agency (IEA) said surplus oil supply is likely in 2025, thanks to the increased capacity from non-OPEC+ members, with the waning Chinese demand poised to persist next year.

Weak Chinese demand expectations for next year come despite the economic support measures recently rolled out by Beijing, and in light of China's shift to relying on electric vehicles (EVs), IEA Executive Director Fatih Birol told Reuters on the sidelines of the Singapore International Energy Week conference.

China, according to Birol, accounted for more than 6% of global oil demand growth in the last decade, when its economy advanced at an average annual growth pace of 6.1%.

“The Chinese economy at around 4.0% (growth) or so would mean China will need less and less energy,” He added. “The impact of the stimulus has not been as significant as some of the market observers have expected.”

Birol explained that as per the current data, “it will be very difficult to see a major uptick of Chinese oil demand.” On another note, the top executive stated that the muted reaction in oil prices amid escalating Middle East tensions was attributed to two main reasons.

One of the two reasons is that “demand is weak this year and the expectation that it will be weak next year.” Another factor capping oil prices is increased supply from non-OPEC producers — the US, Canada, Brazil and Guyana — which is higher than global oil demand growth, he noted.

When asked if he expects OPEC+ to unwind production cuts in 2025, Birol said it is up to OPEC to decide on that. “What I see is there will be a surplus next year of oil in the markets if there are no major changes in the geopolitical context,” he concluded.