Global oil demand is expected to grow by 720,000 barrels per day (kb/d) in 2025, slightly lower than last month’s forecast due to weaker deliveries in the U.S. and China during the second quarter. Demand growth in 2026 is projected at 740 kb/d, tempered by economic challenges and increased adoption of clean energy technologies.
Global oil supply increased by 330 kb/d in May, reaching 105 million barrels per day (mb/d), which is 1.8 mb/d higher than a year ago. This gain was evenly split between OPEC+ and non-OPEC producers as voluntary production cuts were eased. For 2025, world oil supply is forecast to rise by 1.8 mb/d to 104.9 mb/d, followed by an additional 1.1 mb/d increase in 2026, primarily driven by non-OPEC+ output gains of 1.4 mb/d and 840 kb/d, respectively.
Refinery throughputs are expected to rise by about 460 kb/d in both 2025 and 2026, averaging 83.3 mb/d and 83.7 mb/d, respectively. May saw the highest refining margins since early 2024, but a crude price rally in early June pressured profitability as gasoline, naphtha, and fuel oil cracks weakened.
Russian crude and product exports declined by 230 kb/d month-on-month to 7.3 mb/d in May, down 380 kb/d from last year. Falling oil prices caused export revenues to drop by $480 million compared to April, down to $12.6 billion, marking the lowest crude export revenues since February 2021 and product revenues since June 2023.
Global oil inventories increased for the third consecutive month in April, rising by 32.1 million barrels to 7,717 million barrels, mainly due to builds in crude stocks outside the OECD. Although inventories have grown by about 1 mb/d since February, total stocks remain 90 million barrels below last year’s levels. OECD industry stocks fell by 9 million barrels, standing 97 million barrels lower year-on-year. Preliminary data indicate a significant surge in inventories during May.
Brent crude futures rose $5 per barrel to $74 following Israeli airstrikes on Iran’s nuclear and military sites on June 13. Prices had been stable in May and early June as U.S.-China trade tensions eased with a three-month tariff truce. Meanwhile, OPEC+ plans to accelerate the rollback of output cuts supported expectations of a balanced market in the second half of 2025.
Geopolitical Tensions Heighten Market Uncertainty
The rapid escalation in hostilities between Israel and Iran has unsettled global oil markets. Israel’s June 13 airstrikes marked the most severe conflict in decades and included attacks on Iranian energy infrastructure for the first time. Although Iranian oil flows were unaffected at the time of writing, fears of disruption to oil shipments through the Strait of Hormuz—through which about 25% of global oil passes—sent prices to a six-month high.
Iran produces roughly 4.8 mb/d of crude, condensates, and natural gas liquids (NGLs), exporting about 2.6 mb/d, mostly to China. Despite intensified U.S. sanctions, Iran’s crude and condensate exports have remained steady at around 1.7 mb/d this year, alongside significant product shipments averaging nearly 800 kb/d.
Following the Israeli strike, Iran partially suspended production at the South Pars gas field, the world’s largest, which produces gas and condensates. Damage assessment is ongoing. Israeli attacks also forced Israel to halt over 60% of its natural gas output, including at the offshore Leviathan field, and reportedly damaged the Haifa refinery.
Iran has threatened to close the Strait of Hormuz if attacked—a move that would severely disrupt global oil supplies given the region’s production and spare capacity.
Outlook
In the absence of major supply disruptions, the oil market appears well supplied through 2025, with supply growth outpacing demand increases. Inventories have built significantly in recent months, signaling ample supply. Yet, the evolving geopolitical risks underscore the fragility of supply security.
The International Energy Agency (IEA) remains committed to cooperation among producers and consumers to maintain energy security amid these uncertainties.
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