For much of the past century, oil demand grew steadily. Industrial expansion in China and population growth in emerging markets fueled a rising appetite for oil. Although there were some exceptions, like the 2008-2009 recession and the COVID-19 demand slump, global oil use increased by about 1.2 million barrels per day (bpd) on average for nearly 60 years.
Now, the U.S. Energy Information Administration (EIA) forecasts a slower pace of growth. Their latest outlook shows global oil consumption will rise by less than one million bpd in both 2025 and 2026. While still growth, this marks a clear drop from historical averages.
Oil is not disappearing soon, but the era of strong, steady annual increases may be ending. Instead, demand growth looks set to slow and become more uncertain.
The global economy plays a key role in this shift. The International Monetary Fund (IMF) expects world GDP to grow just 2.8% in 2025 and 2026. This is not a recession, but it shows growth is slower, with tighter credit and more trade barriers than in past decades.
Asia, once the main driver of oil demand, is also slowing down. The EIA lowered its forecast for Asia’s oil demand growth in 2025 from 700,000 bpd in January to 500,000 bpd in May. Even a small change matters in a market where supply and demand margins are thin.
Several factors explain Asia’s weaker outlook. China’s property sector faces debt and overcapacity issues, slowing construction and cutting demand for diesel and fuel oil. India still sees growth, but it’s slower. Government support for solar and wind power is reducing oil’s role in the energy mix.
Supply chains are changing too. After COVID-19, companies moved manufacturing and logistics to reduce risk, cutting the volume of goods shipped across the Pacific. Less shipping means lower demand for bunker fuel, which further limits oil growth.
Trade tensions add to the challenges. The U.S. introduced new tariffs in April 2025, leading to retaliation and more uncertainty. Early data shows fewer container ship departures from key Asian ports, indicating reduced trade.
This drop affects the energy market. Fewer ships lead to less cargo transport by trucks and planes, and lower industrial activity overall. It highlights how policy decisions can quickly impact oil demand.
For U.S. shale producers, slower demand growth raises familiar questions about balancing production and price. If supply keeps increasing but demand grows slowly, prices could fall. Without disciplined production, oversupply and lower prices may return.
OPEC+ also faces uncertainty. Its ability to control prices depends on predicting demand. With weaker growth, it might need to cut production again.Refiners, especially those selling to Asia, could see smaller profits. High crude supply with flat product demand squeezes margins.
For investors, slower oil growth is a challenge but not a disaster. Companies that have diversified into natural gas, petrochemicals, or renewables may fare better.It’s a time to rethink how oil firms are judged. Besides earnings and cash flow, investors should focus on companies’ long-term strategies. Those adapting to the changing market may outperform firms sticking to traditional drilling approaches.Oil will remain vital for sectors like aviation, shipping, and petrochemicals. But the days of automatic demand growth are ending.
The future points to a more balanced market, where efficiency and innovation matter more than volume. This shift signals a move toward a more sustainable and resilient global energy system.
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