Highlights

• Global oil demand growth is projected to average 1.1 mb/d in 2025, up from 870 kb/d in 2024. China will marginally remain the largest source of growth, even as the pace of its expansion is a fraction of recent trends and driven almost entirely by its petrochemical sector. At the same time, India and other emerging Asian economies are taking up increasing shares. OECD demand is forecast to return to structural decline following a modest increase last year.
• World oil supply plunged 950 kb/d to 102.7 mb/d in January, as seasonally colder weather hit North American supply, compounding output declines in Nigeria and Libya. Supply was nevertheless 1.9 mb/d higher than a year ago, with gains led by the Americas. Global oil supply is on track to increase by 1.6 mb/d to 104.5 mb/d in 2025, with non-OPEC+ producers accounting for the bulk of the increase if OPEC+ voluntary cuts remain in place.
• Global crude runs fell by 1 mb/d to 82.9 mb/d in January as a cold snap and planned maintenance work reduced US runs. Throughputs are forecast to average 83.3 mb/d this year, with gains of 580 kb/d y-o-y led by non-OECD regions. Sour crude refining margins collapsed in Asia in mid-January, as new US sanctions on Russian boosted Dubai crude prices. Atlantic Basin margins benefited from higher middle distillate cracks.
• Global observed oil stocks fell 17.1 mb m-o-m to 7 647 mb in December, as crude oil stocks plunged by 63.5 mb and products stocks rose by 46.4 mb. OECD industry inventories continued to decline, by 26.1 mb to 2 737.2 mb, 91.1 mb below their five-year average. Preliminary data show total global inventories falling a further 49.3 mb in January, led by a large crude stock draw in China.
• North Sea Dated rallied $8/bbl in early January, briefly trading at a five-month high of $83/bbl, fuelled by new US sanctions on Russia and a Northern Hemisphere cold snap. However, most of these gains then reversed after macro sentiment soured, with the prospect of higher US tariffs raising fears of an emerging trade war. Dated ended the month at $77/bbl, up $2.50/bbl, and was trading at around this level in early February.

Resilience and adaptation

Global oil markets were whipsawed in January as sharply higher prices at the start of the year gave way to myriad pressure points. Anxiety over the impact of new sanctions on Russia and Iran, with fears of potential supply disruptions, triggered an upswing in prices in early January. Market sentiment quickly shifted to renewed concerns over the world economy amid emerging trade wars and its impact on the pace of oil demand growth. Following an $8/bbl rally to a five-month high above $82/bbl in early January, ICE Brent future prices fell back to around $75/bbl as international trade tensions escalated.

Our forecast for global oil demand growth this year has been revised marginally higher, to 1.1 mb/d, following a slight downgrade of 2024 growth to 870 kb/d. Weaker-than-expected 4Q24 demand came despite a drop in temperatures, which affected all OECD regions as well as China. US November deliveries were particularly weak, contracting by 510 kb/d y-o-y, their steepest fall since June. Growth in 2025 is led by China, even as its share of the global increase slumps to 19%, compared with 60% in the preceding decade, driven entirely by the petrochemical sector. India and Other Asia provide an increasing share of growth, contributing a combined 500 kb/d.

Fresh US sanctions on Russia and Iran roiled markets at the start of the year but they have yet to materially impact global oil supply. Iranian crude oil exports are only marginally lower while Russian flows, so far, continue largely unaffected. At the same time, non-OPEC+ oil supplies, led by the Americas, are set to expand by 1.4 mb/d this year – well above projected demand growth. However, improved OPEC+ compliance with agreed targets is slowly chipping away at this year’s projected supply surplus. The producer alliance confirmed on 3 February it plans to start unwinding voluntary cuts from April, noting that “these additional voluntary production adjustments have ensured the stability of the oil market”.

Indeed, with data for 2024 largely complete, our oil market balances show total oil supply matching global oil demand at 102.9 mb/d last year. Looking separately at crude oil, other liquids and refined products, however, reveals a more nuanced picture. Crude oil markets were undersupplied last year, as crude oil and condensate production declined by 120 kb/d y-o-y (while natural gas liquids and biofuels production increased by 570 kb/d and 200 kb/d, respectively), and refiners had to run harder to replenish depleted product inventories. In December, global observed crude oil stocks fell by 64 mb, while product stocks rose by 46 mb. Preliminary data for January indicate further crude draws, led by the non-OECD. Tight US crude balances, marked by Cushing inventories falling to the lowest in a decade, supported the price structure. The M1-M12 backwardations in WTI and Brent rose by $2/bbl, with WTI’s briefly trading near $10/bbl mid-month, its highest in more than a year.

It is still too early to tell how trade flows will respond to new US tariffs or the prospect thereof, and what the impact of the escalation of sanctions on Iran and Russia may be in the longer run. But time and again, oil markets have shown remarkable resilience and adaptability in the face of major challenges – and this time is unlikely to be different.

OPEC+ crude oil production¹
million barrels per day