Amid growing geopolitical tensions and uncertain global economic prospects, the oil market is witnessing significant structural changes, according to the IEA's latest medium-term outlook.
The report, titled "Oil 2025," provides a comprehensive analysis of oil supply, demand, refining, and trade dynamics projected through 2030, surpassing the immediate insights offered in the monthly Oil Market Report by the IEA.
Key Market Developments
The report identifies crucial trends that may redefine global oil markets in the medium term. Notably, China's oil consumption, a major driver for over a decade, is anticipated to peak in 2027.
The report identifies crucial trends that may redefine global oil markets in the medium term
This shift is attributed to the rise in electric vehicle sales, as well as the increased use of high-speed rail and natural gas-powered trucks. Concurrently, U.S. oil supply growth is expected to moderate, as companies prioritize capital discipline by reducing spending. Nevertheless, the United States will remain a prominent contributor to non-OPEC supply growth in the coming years.
Forecasts for Global Oil Demand and Production
Global oil demand is forecasted to rise by 2.5 million barrels per day (mb/d) from 2024 to 2030, leveling off at approximately 105.5 mb/d by the decade's end.
Meanwhile, global oil production capacity is projected to expand by over 5 mb/d, reaching 114.7 mb/d by 2030. The growth is expected to be driven largely by natural gas liquids and other non-crude liquids, motivated by the increasing global need for petrochemical feedstocks.
OPEC+ and Non-OPEC Contributions
The OPEC+ alliance has started adjusting its production cuts, reshaping oil supply trends.
Despite this, the report highlights that increased production from countries like the United States, Canada, Brazil, Guyana, and Argentina is anticipated to adequately meet the growing global demand. In the absence of significant supply disruptions, the medium-term forecast envisions a well-supplied oil market up to 2030, notwithstanding the heightened geopolitical and trade tensions.
Shift in Oil Market Dynamics
IEA Executive Director Fatih Birol commented on the shifting dynamics, stating, "When we look at oil market trends over the past decade, we see a remarkable double act – thanks to the shale revolution, the United States has accounted for 90% of oil supply growth worldwide, while 60% of the rise in global demand has come from China. But these dynamics are shifting."
Birol underscored the ongoing geopolitical risks to oil supply security and emphasized the IEA's commitment to collaborating with energy producers and consumers to ensure energy security.
Impact of Electric Vehicles and Petrochemicals
Electric vehicles are expected to replace 5.4 mb/d of global oil demand by the end of the decade
The report indicates that the proliferation of electric vehicles, which reached a record 17 million units in 2024 and are projected to surpass 20 million by 2025, is steering a peak in global oil demand.
Electric vehicles are expected to replace 5.4 mb/d of global oil demand by the end of the decade. Additionally, as the Middle East, particularly Saudi Arabia, shifts to natural gas and renewables for power generation, global oil demand growth is further influenced.
Petrochemical Industry's Role
The petrochemical industry is predicted to become the primary source of oil demand growth from 2026 onwards, with the industry consuming one in every six barrels of oil by 2030.
As petrochemicals are largely derived from non-refined products like natural gas liquids, these trends are poised to impact the refining sector significantly. The report notes that net refinery capacity is expected to exceed the demand for refined products by 2030, potentially leading to substantial interim capacity shutdowns.
With intensifying geopolitical strains and heightened uncertainty about global economic prospects, oil markets are undergoing structural changes as the key drivers of supply and demand growth of the past 15 years start to fade, according to the latest edition of the IEA’s medium-term outlook.
Oil 2025 provides in-depth analysis of the latest data and forecasts for evolving oil supply, demand, refining and trade dynamics through to 2030, going beyond the near-term analysis provided in the IEA’s monthly Oil Market Report.
Several important trends
US oil supply is now expected to grow at a slower pace as companies scale back spending
It highlights several important trends that could considerably reshape global oil markets over the medium term. According to the report, China – which has driven the growth in global oil demand for well over a decade – is set to see its consumption peak in 2027, following a surge in electric vehicle sales and the continued deployment of high-speed rail and trucks running on natural gas.
At the same time, US oil supply is now expected to grow at a slower pace as companies scale back spending and focus on capital discipline – although the United States remains the single largest contributor to non-OPEC supply growth in the coming years.
Global oil demand
In this context, global oil demand is forecast to increase by 2.5 million barrels per day (mb/d) between 2024 and 2030, reaching a plateau of around 105.5 mb/d by the end of the decade.
At the same time, global oil production capacity is forecast to rise by more than 5 mb/d to 114.7 mb/d by 2030.
This growth is set to be dominated by robust gains in natural gas liquids (NGLs) and other non-crude liquids. The strategic shift towards higher non-crude capacity is driven by strong global demand for petrochemical feedstocks and the development of liquid‑rich gas resources.
OPEC+ alliance
The OPEC+ alliance has started to unwind production cuts, reshuffling oil supply trajectories
The OPEC+ alliance has started to unwind production cuts, reshuffling oil supply trajectories. However, the report finds that increased output from the United States, Canada, Brazil, Guyana and Argentina is set to be more than sufficient to cover the growth in global demand in the coming years.
In the absence of major supply disruptions, the latest medium-term forecast sees a comfortably supplied oil market through 2030 – though significant uncertainties remain, especially given rising geopolitical risks and heightened trade tensions.
Oil market trends
“When we look at oil market trends over the past decade, we see a remarkable double act – thanks to the shale revolution, the United States has accounted for 90% of oil supply growth worldwide, while 60% of the rise in global demand has come from China. But these dynamics are shifting,” said IEA Executive Director Fatih Birol.
“Based on the fundamentals, oil markets look set to be well-supplied in the years ahead – but recent events sharply highlight the significant geopolitical risks to oil supply security. When it comes to energy security, there is no room for complacency. The IEA remains deeply committed to working with energy producers and consumers to safeguard energy security.”
Accelerating sales of electric cars
Based on the current outlook, electric vehicles are set to displace a total of 5.4 mb/d of global oil demand
According to the report, accelerating sales of electric cars – which reached a record 17 million in 2024 and are on course to surpass 20 million in 2025 – have kept a peak in global oil demand on the horizon.
Based on the current outlook, electric vehicles are set to displace a total of 5.4 mb/d of global oil demand by the end of the decade.
The replacement of oil with natural gas and renewables for power generation in the Middle East, particularly in Saudi Arabia, is also expected to weigh on global oil demand growth in the coming years.
Petrochemical industry
With the petrochemical industry now poised to become the dominant source of oil demand growth from 2026 onwards, the report finds the industry is on track to consume one in every six barrels of oil by 2030. Demand for oil from combustible fossil fuels – which excludes petrochemical feedstocks and biofuels – may now peak as early as 2027 even as the consumption of jet fuel continues to grow.
Since petrochemicals are mostly produced from non-refined products such as NGLs, these trends are set to increasingly impact the refining sector. The report sees net refinery capacity far exceeding demand for refined products in 2030, which is likely to result in more capacity shutting down in the interim.
