(Bloomberg) – Global oil demand growth will slow during the remainder of 2025 after a robust first quarter due to “economic headwinds,” the International Energy Agency said.
After increasing 990,000 bpd year-on-year between January and March, the rate of consumption growth will decelerate to a “subdued” 650,000 bpd over the rest of the year, the agency said in its monthly report. It also downgraded the outlook for U.S. shale oil production due to lower crude prices.
“The first three months of the year will likely remain comfortably 2025’s strongest quarter,” said the Paris-based IEA, which advises major economies. “Signs of a slowdown in global oil demand growth may already be emerging.”
Faltering consumption threatens a further blow to oil prices, which briefly crashed to a four-year low last month as U.S. President Donald Trump launched a global trade war and OPEC+ announced plans to surge production. Brent futures have recovered slightly to near $65 a barrel as some of those trade fears abated.
“We are seeing clear signs the global economy is slowing and oil demand growth is slowing,” Toril Bosoni, head of the IEA’s oil industry and markets division, said in a Bloomberg television interview in Paris.
“Increased trade uncertainty is expected to weigh on the world economy and, by extension, oil demand,” according to the report. Data on oil deliveries in emerging economies, particularly China and India, has been weaker than expected.
The slump is taking its toll on oil producers, prompting the IEA to downgrade projections for the U.S. shale industry for a second month, including a sharp 190,000 bpd revision for 2026.
Despite the downturn for American drillers, growth in new supplies worldwide will still exceed the expansion of demand this year and next, creating a global surplus. Inventories will swell by as much as 2 million bpd in the first quarter of 2026.
The glut could be even bigger if the Organization of the Petroleum Exporting Countries and its partners confirm further output increases.
OPEC+ has announced hikes of 411,000 bpd in May and June — triple the initially scheduled volume — as group leader Saudi Arabia seeks to punish members that have exceeded their production limits.
The Saudis have warned of further surges, but the IEA’s calculations assume that OPEC+ chooses to keep group production steady after June. The coalition is due to review its plans during a video conference on June 1. Ratifying additional hikes would cause inventories to pile up even faster.
