(Bloomberg) — Global oil markets face a smaller surplus this year than previously expected amid stronger demand and new risks to supply, the International Energy Agency said.
Most Read from Bloomberg
World inventories are set to expand by 725,000 barrels a day in 2025, rather than the 950,000 barrels a day projected before, the adviser to major economies said in a monthly report on Wednesday. It fractionally increased global consumption estimates for 2024 and 2025.
“The weather turned decidedly colder in December in Canada, the northern and central regions of the United States,” the Paris-based IEA said. “Prices also got a boost as traders considered multiple supply risks.”
Sweeping new sanctions announced by the Biden administration last week could “significantly disrupt Russian oil supply and distribution chains,” according to the report. Exports from Iran could also be curbed if the incoming Trump administration follows through on pledges of a tougher stance, the IEA said.
It’s too early to predict the exact size of either potential losses, but if significant enough it could allow others in OPEC+ to proceed with plans for reviving output, the agency added.
“With Russian and Iranian supply at risk of disruption, there may be room for OPEC to unwinds cuts as they have signaled that they plan to do in 2025,” Toril Bosoni, head of the IEA’s oil industry and markets division, said in an interview with Bloomberg TV.
Supply dangers and winter weather have pushed up crude prices as the year begins, lifting Brent futures to a five-year high above $81 a barrel on Monday.
Freezing temperatures could hit production in North America and further deplete already-low stockpiles at the US storage hub in Cushing, Oklahoma, according to the report. Oil inventories in developed nations are at their lowest level since August 2022, it said.
The IEA bolstered world consumption estimates for both 2024 and 2025 by 100,000 barrels a day. Demand growth will accelerate slightly to 1.05 million barrels a day this year “as the economic outlook improves marginally,” bringing average levels to 104 million barrels a day.
The subdued expansion in demand will be more than matched by growth in supplies from outside the OPEC+ alliance. Supplies will swell by 1.5 million barrels a day this year — the same rate as 2024 — led again by a similar array of producers in the Americas: the US, Brazil, Canada, Guyana and Argentina.
Story continues
This year’s global supply overhang could be even bigger than anticipated if OPEC+ proceeds with delayed plans to gradually restore halted production from the second quarter. The alliance led by Saudi Arabia is due to add monthly tranches of roughly 120,000 barrels a day beginning in April, but will likely review the plan in early March before proceeding.
On Tuesday, the US government’s Energy Information Administration forecast a widening oversupply in 2026 as OPEC finally brings back production while output from the US, Canada and Guyana continues to grow.
–With assistance from Francine Lacqua.
(Updates with IEA official interview in sixth paragraph.)
Most Read from Bloomberg Businessweek
©2025 Bloomberg L.P.