Global Oil Demand Projected to Rise by 1.21 Million Barrels Per Day in 2025

RIYADH: Global oil consumption is expected to climb by 1.21 million barrels per day (bpd) in 2025, reaching a total of 103.74 million bpd, according to a report by the King Abdullah Petroleum Studies and Research Center (KAPSARC).

The Saudi-based think tank’s latest analysis also forecasts a further increase of 1.23 million bpd in 2026, pushing global oil demand to 104.97 million bpd.

Comparing Projections: KAPSARC vs. OPEC

KAPSARC’s forecast for 2025 is slightly lower than the estimate by the Organization of the Petroleum Exporting Countries (OPEC), which in December 2024 predicted a 1.4 million bpd rise in global demand, bringing the total to 105.3 million bpd.

Drivers of Oil Demand Growth

The report identifies several factors influencing the anticipated growth in oil demand for 2025 and 2026:

1. Economic Conditions: Continued recovery and expansion in global markets.
2. Geopolitics: Increasingly significant in shaping market volatility.
3. Inventory Levels: Fluctuations in stockpiles will play a role in pricing trends.
4. Energy Transition: While still a minor factor, the global shift toward renewable energy sources is gaining influence.

“Over the past couple of years, oil markets have been primarily driven by economic trends and OPEC+ actions. As we move into 2025 and 2026, new actors — particularly geopolitics, inventory management, and the energy transition — will increasingly influence market dynamics,” KAPSARC noted.

Inflation’s Impact on Oil Demand

Global inflation, expected to remain above pre-pandemic levels, is another critical factor. Persistent inflationary pressures could reshape consumption patterns and impact energy market investments over the next two years.

Regional Oil Demand Trends

The report projects varying growth rates for oil demand across regions:

• Organisation for Economic Co-operation and Development (OECD) Nations:
  Minimal or no growth is expected in OECD countries.
• Non-OECD Nations:
  Significant demand growth is anticipated in countries like India, China, and the Middle East.
  • India: Predicted to increase oil consumption by 220,000 bpd in both 2025 and 2026.
  • China: Expected to see a rise of 210,000 bpd in 2025 and 190,000 bpd in 2026.
  • Middle East: Projected to grow by 200,000 bpd annually over the same period.

Overall, non-OECD countries are forecast to account for 1.09 million bpd of annual demand growth in 2025 and 2026.

Global Oil Supply Projections

KAPSARC anticipates that global oil production will rise by:

• 1.48 million bpd in 2025
• 1.98 million bpd in 2026

This growth is expected to result in a supply surplus of:

• 260,000 bpd in 2025
• 1.01 million bpd in 2026

However, KAPSARC warns that historically low inventory levels in OECD countries could lead to bearish market conditions, putting downward pressure on oil prices.

Outlook for the Oil Market

“Given the dynamics between oil supply and demand, we anticipate a surplus in both 2025 and 2026. If OECD nations continue to maintain their low inventory levels, this could exacerbate bearish trends in the commodities market,” KAPSARC concluded.

The global oil market is poised for steady growth in demand over the next two years, driven largely by non-OECD nations and influenced by a mix of geopolitical and economic factors. As the world navigates energy transitions and inflationary pressures, the balance between supply and demand will remain a critical determinant of market stability.

For energy stakeholders, monitoring these trends will be key to adapting strategies and leveraging opportunities in a volatile market landscape. Source: Arabnews

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