The IEA said today that the Opec+ alliance's improving compliance with agreed crude production targets is "slowly chipping away" at its projected supply surplus this year.
In its latest Oil Market Report (OMR), the Paris-based agency again lowered its forecasted surplus for this year, this time by 270,000 b/d to 450,000 b/d. This is the agency's third consecutive downgrade since November, when it saw 2025 supply outstripping demand by 1.15mn b/d.
These forecasts are subject to change. With data now "largely complete" for 2024, the agency's balances show supply matching demand exactly at 102.9mn b/d. This is a long way off the 800,000 b/d supply surplus the IEA forecast for 2024 this time last year.
Opec+ is implementing three sets of crude production cuts, and is scheduled to start unwinding one of these — totalling 2.2mn b/d — starting in April. A recent meeting of the group's key producers signalled no change to this plan.
The IEA continues to assume all Opec+ cuts will remain in place this year. But the agency said that should production return as planned, this would add 430,000 b/d to its 2025 supply forecast.
Aside from Opec+, there are other key supply uncertainties this year. These range from new US sanctions targeting Russian and Iranian oil exports to US tariffs on some of its key trading partners.
"It is still too early to tell how trade flows will respond to new US tariffs or the prospect thereof, and what the impact of the escalation of sanctions on Iran and Russia may be in the longer run," the IEA said.
As thing stand, the IEA sees global oil supply growing by 1.56mn b/d this year to 104.45mn b/d, compared with growth of 1.76mn b/d projected in its January report. This slower growth was largely driven by Opec+, which the agency now sees supplying 170,000 b/d less than previously thought this year.
It also noted a 950,000 b/d fall in global oil supply in January, "with extreme cold weather hitting North American supply, compounding large declines in Nigerian and Libyan production."
On demand, the agency upgraded its growth forecast this year by 50,000 b/d to 1.1mn b/d. It sees oil demand at 104mn b/d in 2025, driven by "a minor pickup in GDP growth and lower oil prices as per the current forward curve."
The IEA said global observed oil stocks fell by 17.1mn bl in December. Crude stocks fell by 63.5mn bl and products stocks rose by 46.4mn bl. It said preliminary data show global stocks falling by 49.3mn bl in January, led by large draw in China.
