Global Oil Market Heading Toward a Plateau as Structural Shifts Take Hold

The IEA’s new Oil 2025 report forecasts a slowdown in demand growth and highlights emerging supply trends, as rising geopolitical tensions and electric vehicle adoption reshape the oil landscape to 2030.

The global oil market is entering a period of structural transformation, driven by weakening traditional growth drivers and heightened geopolitical uncertainty, according to the Oil 2025 medium-term outlook released today by the International Energy Agency (IEA). The report offers a comprehensive analysis of oil supply, demand, refining, and trade dynamics through the end of the decade.

A key highlight is that China, the dominant force behind global oil demand growth over the past decade, is projected to reach peak consumption in 2027. This milestone will be largely fueled by the rapid uptake of electric vehicles, the expansion of high-speed rail, and increased use of natural gas-powered trucks.

On the supply side, while U.S. oil production is expected to grow at a slower pace due to tighter capital discipline, the country remains the largest contributor to non-OPEC supply growth. Overall, global oil demand is set to increase by 2.5 million barrels per day (mb/d) between 2024 and 2030, peaking at around 105.5 mb/d by decade’s end. In contrast, oil production capacity is forecast to rise by more than 5 mb/d to reach 114.7 mb/d by 2030, driven primarily by strong growth in natural gas liquids (NGLs) and other non-crude sources.

The OPEC+ alliance has begun scaling back its production cuts, reshaping global oil supply trajectories. However, the report notes that growing output from countries such as the U.S., Canada, Brazil, Guyana, and Argentina will be more than sufficient to meet demand growth over the coming years—assuming no major supply disruptions.

“Looking at oil market trends over the past decade, we’ve seen a striking duality: the U.S. shale revolution accounted for 90% of global supply growth, while China drove 60% of demand growth. That dynamic is now shifting,” said IEA Executive Director Fatih Birol. “While market fundamentals suggest adequate supply, recent developments clearly underline the significant geopolitical risks to oil security. There’s no room for complacency.”

The surge in electric vehicle (EV) adoption is another major factor altering the demand outlook. EV sales hit a record 17 million in 2024 and are expected to exceed 20 million in 2025. According to the IEA, these vehicles will displace 5.4 mb/d of oil by 2030. Additionally, oil substitution with natural gas and renewables, especially in the Middle East, including Saudi Arabia, is expected to further dampen demand growth.

From 2026 onwards, the petrochemical sector is projected to become the main driver of oil demand. By 2030, one in every six barrels of oil will be consumed by this industry. Since petrochemicals are largely derived from unrefined products like NGLs, this trend is likely to put increasing pressure on the refining sector. The report forecasts that global refining capacity will exceed demand for refined products, potentially leading to widespread plant closures over the decade.

Despite projected supply surpluses, the IEA underscores the importance of continued coordination among energy producers and consumers to maintain energy security amid ongoing market volatility.