IEA Adjusts Global Oil Demand Forecast Significantly

The International Energy Agency (IEA) has revised its outlook for global oil demand, citing substantial impacts from the aggressive tariff policies implemented by the U.S. government. In its latest monthly report released in Paris, the agency forecasts that the increase in oil demand for the current year will average only 730,000 barrels per day (bpd), a reduction of 300,000 bpd from previous estimates.

The IEA attributes this downward adjustment to the escalating trade tensions that have adversely affected economic prospects. The erratic trade policy of the U.S. administration, characterized by a series of tariff announcements and retractions, has created significant uncertainty within the oil market. Following the announcement of sweeping tariffs on nearly all trading partners, concerns over weakened demand led to a sharp decline in oil prices earlier this month, with Brent crude dropping below $60 per barrel, marking a four-year low. Recently, Brent crude was trading at approximately $64.79 per barrel.

Looking ahead, the IEA anticipates that the ramifications of the U.S. tariff policies will continue to weigh on oil demand into 2026, with projections indicating an even lower growth rate of 690,000 bpd. However, the IEA has cautioned that its forecasts are subject to change, depending on macroeconomic conditions that could evolve rapidly.

In March, the agency estimated the global supply of crude oil to be around 103.6 million bpd. Furthermore, the IEA pointed to a recent decision by the OPEC+ group, which plans to increase daily production by 411,000 bpd by the end of May. Given the current market conditions, the anticipated production increase could be significantly lower than expected.

Earlier this week, the Organization of the Petroleum Exporting Countries (OPEC) also revised its demand growth forecasts downward, citing potential adverse effects from the aggressive U.S. tariff policies. However, OPEC adjusted its projections by a smaller margin, reducing the demand growth forecast by only 100,000 bpd, anticipating an increase of 1.3 million bpd for both 2025 and 2026.