IEA Slashes Oil Demand Growth Forecast as Trade Wars Escalate
Global oil demand is expected to grow by just 730,000 barrels per day (bpd) this year amid escalating trade tensions, the International Energy Agency (IEA) said on Tuesday, slashing the previous month’s growth forecast by 300,000 bpd.
Escalating trade tensions have negatively impacted the economic outlook, the IEA said today in its Oil Market Report (OMR) for April, and sees further slowdown in demand growth next year, when consumption is now forecast to increase by only 690,000 bpd.
Risks to the forecast “remain rife given the fast-moving macro backdrop,” the IEA noted.
The downgrade to demand growth expectations comes just as the agency saw robust oil consumption during the first quarter of the year, in which global oil demand rose by 1.2 million bpd year-on-year—the strongest growth rate since 2023.
But since early April, the situation with the tariffs and global trade and economy has been volatile and highly unpredictable, the Paris-based agency said, and warned the world to “buckle up”.
“With negotiations and countermeasures still ongoing, the situation is fluid and substantial risks remain. We have lowered the economic growth assumptions that underpin our forecasts, leading to a 400 kb/d reduction in expected oil demand growth for the remainder of the year,” the IEA said.
“With arduous trade negotiations expected to take place during the coming 90-day reprieve on tariffs and possibly beyond, oil markets are in for a bumpy ride and considerable uncertainties hang over our forecasts for this year and next.”
The IEA’s demand growth downgrade wasn’t unexpected—investment banks and OPEC have also cut their forecasts, citing the trade tensions. Many Wall Street banks have started to warn that the tariff and trade wars have raised the odds of a recession to above 50%.
Earlier this week, OPEC revised down its global oil demand growth forecast for 2025, citing escalating trade tensions and weaker-than-expected economic indicators. The cartel now anticipates a demand increase of 1.3 million bpd for 2025, down by 150,000 bpd from its previous projection. Similarly, the 2026 forecast has been adjusted downward by 150,000 bpd to 1.28 million bpd.
