The International Energy Agency (IEA) said on Thursday that global oil demand growth will slow down significantly for the rest of 2025 due to economic challenges and record electric vehicle (EV) sales.
Oil demand rose by 990,000 barrels per day (bpd) in the first quarter of 2025. However, the IEA expects growth to slow to 650,000 bpd for the remaining months, according to its May Oil Market Report.
For the full year, the agency projects demand to increase by 740,000 bpd, slightly higher than last month’s estimate of 730,000 bpd. That earlier forecast had been cut by 300,000 bpd in March following U.S. tariff actions in April.
The IEA anticipates much slower demand growth in the second, third, and fourth quarters compared to the start of the year. For 2026, it predicts demand will rise by about 760,000 bpd, similar to this year’s forecast and last month’s lowered outlook.
Despite recent easing in U.S.-China trade tensions, the IEA said ongoing trade uncertainties could still weigh on the global economy and reduce oil demand.
Signs of slowing demand growth are already appearing. After a strong first quarter, demand in China and India has been weaker than expected, the agency noted.
Lower oil prices and reduced spending by U.S. shale producers have led the IEA to lower its forecast for U.S. shale production for the second consecutive month.
Similarly, OPEC on Wednesday reduced its forecast for supply growth from non-OPEC+ producers, including the U.S. This group is now expected to increase output by 800,000 bpd in 2025, down 100,000 bpd from last month’s estimate of 900,000 bpd, reflecting lower upstream investment amid falling prices.
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