The IEA warns: More OPEC crude will jeopardize market equilibrium.

The International Energy Agency (IEA) warns that the additional oil production that OPEC and its allies intend to pump starting in September jeopardizes market equilibrium , given the slowdown in crude demand growth it forecasts for 2025 and 2026.

In its monthly report on the oil market published this Wednesday, the IEA revised its estimates on global consumption very slightly downwards , leaving them at An average of 103.737 million barrels per day (mbd) in 2025, which is 20,000 barrels less than what was estimated in July. This means that the annual increase will remain at 685,000 barrels per day , compared to 860,000 in 2024. By 2026, the figure will reach 104.436 million barrels per day, an increase of 699,000 barrels.

The report's authors emphasize that demand increased by 600,000 barrels per day in the second quarter of this year compared to the same period in 2024, the lowest increase in the past year . The main reason is that consumption in emerging economies has been weaker than expected, leading to downward revisions to the forecasts for China, Brazil, Egypt, and India compared to the previous report.

The exception to that trend is aviation , which is showing robust performance this summer in the United States and Europe , which will contribute to a global increase in kerosene demand in 2025 of 2.1%, the highest of all petroleum products. However, although the report's authors anticipate that kerosene production will need 7.7 mb/d this year, that will still be 180,000 barrels less than the historical peak in 2019, before the COVID crisis.

Regarding the August 3 announcement by OPEC and its allies ('OPEC+') that they would increase production by 547,000 barrels per day starting September 1 to complete the return of the 2.2 mb/d they had withdrawn from the market in 2023, the IEA assumes that it will have little effect on other producers.

In fact, it has revised upwards its oil production forecasts by 370,000 barrels per day for this year, the same number that OPEC+ members will add.

By 2026, the upward correction compared to last month is 620,000 barrels per day , of which 520,000 will be produced by the oil cartel . The difference between these two figures will essentially be made by the United States , which will further strengthen its position as the world's leading crude oil producer .

In short, 105.5 mb/d will be released onto the market this year, which is 2.5 mb/d more than in 2024. Despite the OPEC+ decision, the majority of this additional contribution (1.3 mb/d) will come from other producing countries, particularly the United States, Canada, Brazil, and Guyana . The same trend will be repeated in 2026, with 107.4 mb/d, an annual increase of 1.9 mb/d, of which 1 mb/d will come from outside OPEC+.

Balancing the market

All of this leads the IEA to indicate that " oil market balances appear increasingly inflated , as projected supply far exceeds demand by the end of the year and in 2026." However, it clarifies that other variables could alter this assessment, particularly the new sanctions announced by the European Union against Russia , and by the United States against Russia and Iran . It should be remembered that both are the third and fifth largest oil producers in the world.

The agency 's conclusion, which brings together the main countries of the developed world, is that "although it is still too early to determine the outcome of these latest political changes, which are going in different directions, it is clear that something will have to adjust for the market to balance ."