The International Energy Agency (IEA) has significantly downgraded its world oil demand growth forecast for 2025 due to escalating trade tensions. In its latest Oil Market Report (OMR), published on April 15th, the IEA reduced its projection by 300,000 barrels per day (b/d) to 730,000 b/d. This revision follows a robust first quarter of 2025, where oil consumption grew by 1.2 million b/d year-on-year, marking the strongest rate since 2023.
The IEA attributes this downgrade to the negative economic impact of recent trade tariff announcements. Despite exemptions for oil, gas, and refined product imports in the US, concerns persist that these measures could fuel inflation, slow economic growth, and intensify trade disputes, thereby weighing on oil prices. Benchmark crude oil prices experienced a sharp decline, reaching four-year lows, due to increased trade tensions and the prospect of higher supplies from some OPEC+ countries. Brent futures initially tumbled by over $23 per barrel before partially recovering after a delay in the implementation of some tariffs.
The IEA anticipates continued volatility in oil markets, given the ongoing trade negotiations. They caution that the drastic trade tariffs pose a significant threat to consumption in major economies like the US and China. As a result, the IEA has revised its global oil demand growth forecast to approximately two-thirds of its previous estimate, now projecting demand to reach 103.5 million b/d.
