The IEA’s recent report indicates a significant reduction in the anticipated global oil surplus from the previous year. This change comes as demand growth strengthens in Asia, particularly in China and India. However, the rising demand is tempered by various geopolitical factors affecting oil supply.
OPEC+ nations, including Russia and Iran, face substantial sanctions from the United States, contributing to uncertainties in oil supply. The impact of these sanctions is evident in the reduction of the oil surplus forecasts. The sanctions have led to an increase in oil prices last month, driven by concerns over potential supply disruptions.
The report detailed crude oil futures reaching $80 per barrel in London in January, though prices have since decreased. This fluctuation follows discussions between President Donald Trump and Russian President Vladimir Putin regarding the conflict in Ukraine.
The IEA also highlighted the shifting dynamics in global oil demand, projecting an average consumption of 104 million barrels per day for the year. China continues to be a key driver of this demand, although growth is expected to slow. Notably, India and other Asian countries are poised to absorb a larger share of this growth as China’s demand approaches its peak.
On the supply side, OPEC+ output forecasts have been revised downwards by 170,000 barrels per day for 2025, in light of ongoing sanctions and policy decisions by major players like the United States. Despite these challenges, some OPEC+ countries might demonstrate resilience against these restrictions.
Despite the challenges posed by increased demand and geopolitical tensions, the oil market shows resilience. The IEA’s projections emphasize the adaptability of oil markets in the face of significant hurdles.
