Oil Market Report: Q1 2025

Key takeaways

Deteriorating macroeconomic conditions lead to forecasts for lower oil demand

Based on EIA estimates, oil demand in Q1 2025 rose 0.4 million bbl/d compared to the previous quarter, to 103.5 million bbl/d. China, India, and other non-OECD Asian countries remain the key growth regions.

However, amid a worsening macroeconomic situation, analysts are revising and lowering their oil demand forecasts. According to EIA, OPEC, and IEA projections, growth in oil demand will be in the range of 0.7 to 1.3 million bbl/d by the end of 2025. A large share of the rise in global oil demand will be supported by non-OECD countries, where strong demand from air and road transport, industry, and petrochemicals is expected.

EIA and OPEC analysts forecast that in 2026 the oil demand growth rate will generally remain at the 2025 level; the IEA gives a more pessimistic assessment and expects a slowdown in demand growth in 2026.

Oil supply growth in 2025 is expected from OPEC+ and non-OPEC+ countries

At the end of Q1 2025, according to EIA data, the oil supply rose by 0.1 million bbl/d, to 103.3 million bbl/d. OPEC+ countries increased oil production by 0.4 million bbl/d, while the United States, in contrast, reduced it.

In the short term OPEC+ countries are expected to persist with the removal of voluntary production cuts and to gradually release additional oil volumes to the market.

However, IEA and EIA analysts are sticking to their forecasts that non-OPEC+ countries (the US, Canada, Brazil*, Guyana) will be the key drivers of supply growth in 2025.

EIA and IEA analysts forecast that oil supply growth will slow in 2026 relative to projected 2025 levels.

The end of Q1 saw a small market deficit, but by year end a surplus is forecasted

The EIA estimates that there will be a 0.2 million bbl/d deficit in the oil market at the end of Q1 2025.

As a result of the projected rise in the oil supply by OPEC+ countries, as well as due to revised and lowered estimates of global oil demand, the EIA forecasts that, from Q2 2025, the oil market may experience a surplus as well as growth in commercial oil reserves.

According to EIA forecasts, the oil market will remain in surplus in 2025 and 2026.

Uncertain economic growth and increasing oil volumes will dampen oil prices in 2025

On average, in Q1 2025 Brent crude prices went up slightly against the previous quarter (+ 1.6%). The start of the year saw a rise in quotes, to over USD 80/bbl, due to new sanctions restrictions. Then the trend changed and prices declined up to mid-March, to USD 70/bbl, amid macroeconomic tensions and expectations of a OPEC+ production ramp-up. At the end of March oil prices strengthened.

However, later in 2025 oil prices are projected to come under pressure due to a possible escalation of the US trade war and reduced global demand. Decisions on oil production volumes by the OPEC+ alliance will have an additional impact on prices.

The current long-term (after 2029) consensus forecast for Brent crude is at around USD 71/bbl, in real terms, in 2025 prices.