As geopolitical tensions escalate between Israel and Iran, the global oil market faces increasing uncertainty. The International Energy Agency (IEA) has released its medium-term report titled “Oil 2025”, outlining critical trends in oil supply, demand, and market dynamics through the end of the decade. The key takeaway: global oil production capacity is set to outpace demand growth, raising the risk of oversupply and increased volatility.
Global Oil Demand to Plateau by 2030
According to the IEA, global oil demand will grow by 2.5 million barrels per day (mb/d) between 2024 and 2030, peaking around 105.5 mb/d. India is expected to drive much of this growth, with a projected increase of 1 mb/d, supported by robust GDP expansion. However, annual demand growth is expected to slow in the latter half of the decade, with a slight decline forecast by 2030 due to economic headwinds and a global shift toward renewable energy.
Oil Production Capacity Surging Ahead
In contrast, global oil production capacity is forecast to rise by over 5 mb/d, reaching 114.7 mb/d by 2030. The largest contributions will come from Saudi Arabia and the United States, creating a potential oversupply scenario if demand weakens. This imbalance could result in downward pressure on global oil prices and challenges for major oil-exporting nations.
Shifting Consumption Patterns in China and the U.S.
The IEA report notes a stagnation in China’s oil consumption, which is now expected to remain flat through 2030—contrary to earlier predictions of steady growth. Meanwhile, the United States may see an increase of 1.1 mb/d in demand, largely driven by lower fuel prices and slower adoption of electric vehicles (EVs). These shifts signal evolving energy consumption trends in the world’s largest economies.
OPEC+ Adjusts Long-Standing Production Cuts
The OPEC+ alliance has begun reversing production cuts that have been in place for nearly five years. This policy shift could further amplify global supply growth, adding to market volatility and reshaping the global energy landscape.
Iran’s Oil Supply Resilient but Vulnerable to Sanctions
Despite stringent U.S. sanctions, Iran’s oil production reached its highest levels since 2017 in 2024, with significant exports to China. However, a recent decline in Chinese imports signals that renewed sanctions on Iran’s oil supply chain are taking effect, adding a layer of geopolitical risk to global supply stability.
Refining Capacity and Biofuel Expansion
The IEA projects that refining capacity will exceed demand for refined products by 2030, potentially triggering closures of inefficient refineries. At the same time, global biofuels production is set to expand, led by Brazil and India’s ethanol output, reflecting a broader energy transition in emerging markets.