IEA Continues To Overstate 2025 Oil Market Surpluses With Unrealistic Supply Growth Assumptions
Not the first time, but Q4 balances are better than expected.
It's another month and the IEA is back at it again with its ridiculous 2025 oil market supply & demand forecast. According to the IEA, 2025 oil market will be oversupplied by ~1 million b/d.
You will notice in the "note" section that it assumes OPEC+ production cuts stay in place. That is not what you think it's saying.
More specifically, the IEA increased crude production for Russia, Kazakhstan, and Azerbaijan, totaling 440k b/d. If the voluntary cuts stay in place, then we should see these figures translate to the surplus, which is clearly not the case.
What's also interesting about how IEA is messaging it is that by promoting an oil surplus in 2025, it is saying that the oil market will be stable again. Here's what it said in the report:
Our current balances suggest that even if the OPEC+ cuts remain in place, global supply exceeds demand by more than 1 mb/d next year. With supply risks omnipresent, a looser balance would provide some much-needed stability to a market upended by the Covid pandemic, Russia’s full-scale invasion of Ukraine and, most recently, heightened unrest in the Middle East.
This is a notable statement considering that global oil inventories are trending to multi-year lows again.
Source: IEA
If oil balances fail to build to IEA's expectation, then I guess more volatility could be expected.