The global oil market is entering a new phase of structural change as oil production capacity is expected to far outpace demand growth through the end of the decade, the International Energy Agency (IEA) said in its Oil 2025 medium-term outlook released on June 17.&nbsp;The report warns, however, that mounting geopolitical risks, notably the intensifying Israel-Iran conflict, continue to pose a threat to supply security despite strong fundamentals.According to the IEA, global oil production capacity is forecast to grow by over 5 million barrels per day (mb/d) by 2030, reaching 114.7 mb/d. Meanwhile, demand is expected to rise by just 2.5 mb/d from 2024 levels, plateauing around 105.5 mb/d by the decade’s end.&nbsp;This growing surplus signals a potentially well-supplied market over the next five years, barring any major disruptions.The agency attributed this supply growth to robust output from non-OPEC+ countries, particularly the “Americas Quintet”, the United States, Canada, Brazil, Guyana, and Argentina.&nbsp;These nations are forecast to more than cover the projected increase in demand, even as the OPEC+ alliance gradually unwinds voluntary production cuts.“From 2015 to 2024, the US accounted for 90 per cent of global supply growth. That pace is slowing, but it still remains the largest contributor to non-OPEC+ output,” IEA Executive Director Fatih Birol said. He added that oil markets remain structurally sound but vulnerable to geopolitical shocks.<h2>China and US no longer primary demand-supply anchors</h2>The report marks a significant turning point in global oil market dynamics. For over a decade, China and the US were the dual engines of oil demand and supply, respectively.&nbsp;Chinese demand alone accounted for 60 per cent of global consumption growth over the past 10 years, while US shale production drove the majority of new supply.However, that era may be ending. Chinese oil consumption is expected to peak by 2027 as electric vehicle (EV) sales soar, high-speed rail networks expand, and more trucks switch to natural gas. EV sales hit a record 17 million in 2024 and are projected to exceed 20 million in 2025, displacing an estimated 5.4 mb/d of oil demand globally by 2030.Meanwhile, US oil output growth is slowing as shale producers reduce capital spending and prioritise returns over expansion. Despite this, the US remains the single largest contributor to non-OPEC supply growth through the decade.<h2>Asia will drive future demand, led by India</h2>While demand in advanced economies is expected to contract, Asia, particularly India, is set to lead the next wave of oil consumption growth. India alone is forecast to add 1 mb/d in new demand by 2030, making it the single largest contributor among individual countries.“Asia dominates growth,” the report notes, citing continued industrialisation and rising transportation fuel needs across South and Southeast Asia. This shift underscores a broader rebalancing in global energy consumption patterns.The petrochemical sector is also set to become the dominant source of oil demand growth from 2026 onwards. By 2030, the industry is expected to consume one in every six barrels of oil, primarily in the form of natural gas liquids (NGLs) and other non-crude inputs.<h2>Geopolitical risks cast a shadow</h2>Despite the projected supply surplus, recent geopolitical events have raised alarms over potential disruptions. On June 13, Israel launched air strikes on Iranian military and energy facilities, prompting retaliatory attacks.&nbsp;Though there has been no immediate impact on Iranian oil exports, currently around 2.6 mb/d, fears of a wider conflict and a potential closure of the Strait of Hormuz pushed Brent crude futures to a six-month high of $74 per barrel.Iran also reported production cuts at the South Pars gas field due to fire damage, while Israel halted over 60 per cent of its natural gas output amid security concerns. The Strait of Hormuz remains a critical chokepoint for global energy flows, with 25 per cent of the world’s oil supply passing through the narrow waterway.“While fundamentals point to a well-supplied market, these recent developments are a stark reminder of the ongoing geopolitical fragility in oil markets,” Birol warned.<h2>Refining and inventory trends</h2>With oil demand for combustion fuels nearing a peak, global refining capacity is projected to exceed demand for refined products by 2030. This imbalance may lead to more refinery closures, especially in mature markets. Refinery throughput is forecast to rise modestly by around 460 kb/d annually in 2025 and 2026, reaching 83.7 mb/d.Oil inventories have been rising steadily, with global stocks surging by 93 million barrels in May alone. Despite this, OECD inventories remain 97 million barrels below 2024 levels, reflecting ongoing volatility in market sentiment.In the absence of major disruptions, the IEA projects a stable, oversupplied oil market through 2030. Yet, the shadow of geopolitical conflict and the energy transition underscores a fragile balance. As Birol concluded, “There is no room for complacency when it comes to energy security.”

The report warns, however, that mounting geopolitical risks, notably the intensifying Israel-Iran conflict, continue to pose a threat to supply security despite strong fundamentals.

The global oil market is entering a new phase of structural change as oil production capacity is expected to far outpace demand growth through the end of the decade, the International Energy Agency (IEA) said in its Oil 2025 medium-term outlook released on June 17. The report warns, however, that mounting geopolitical risks, notably the intensifying Israel-Iran conflict, continue to pose a threat to supply security despite strong fundamentals. According to the IEA, global oil production capacity is forecast to grow by over 5 million barrels per day (mb/d) by 2030, reaching 114.7 mb/d. Meanwhile, demand is expected to rise by just 2.5 mb/d from 2024 levels, plateauing around 105.5 mb/d by the decade’s end. This growing surplus signals a potentially well-supplied market over the next five years, barring any major disruptions. The agency attributed this supply growth to robust output from non-OPEC+ countries, particularly the “Americas Quintet”, the United States, Canada, Brazil, Guyana, and Argentina. These nations are forecast to more than cover the projected increase in demand, even as the OPEC+ alliance gradually unwinds voluntary production cuts. “From 2015 to 2024, the US accounted for 90 per cent of global supply growth. That pace is slowing, but it still remains the largest contributor to non-OPEC+ output,” IEA Executive Director Fatih Birol said. He added that oil markets remain structurally sound but vulnerable to geopolitical shocks. China and US no longer primary demand-supply anchors The report marks a significant turning point in global oil market dynamics. For over a decade, China and the US were the dual engines of oil demand and supply, respectively. Chinese demand alone accounted for 60 per cent of global consumption growth over the past 10 years, while US shale production drove the majority of new supply. However, that era may be ending. Chinese oil consumption is expected to peak by 2027 as electric vehicle (EV) sales soar, high-speed rail networks expand, and more trucks switch to natural gas. EV sales hit a record 17 million in 2024 and are projected to exceed 20 million in 2025, displacing an estimated 5.4 mb/d of oil demand globally by 2030. Meanwhile, US oil output growth is slowing as shale producers reduce capital spending and prioritise returns over expansion. Despite this, the US remains the single largest contributor to non-OPEC supply growth through the decade. Asia will drive future demand, led by India While demand in advanced economies is expected to contract, Asia, particularly India, is set to lead the next wave of oil consumption growth. India alone is forecast to add 1 mb/d in new demand by 2030, making it the single largest contributor among individual countries. “Asia dominates growth,” the report notes, citing continued industrialisation and rising transportation fuel needs across South and Southeast Asia. This shift underscores a broader rebalancing in global energy consumption patterns. The petrochemical sector is also set to become the dominant source of oil demand growth from 2026 onwards. By 2030, the industry is expected to consume one in every six barrels of oil, primarily in the form of natural gas liquids (NGLs) and other non-crude inputs. Geopolitical risks cast a shadow Despite the projected supply surplus, recent geopolitical events have raised alarms over potential disruptions. On June 13, Israel launched air strikes on Iranian military and energy facilities, prompting retaliatory attacks. Though there has been no immediate impact on Iranian oil exports, currently around 2.6 mb/d, fears of a wider conflict and a potential closure of the Strait of Hormuz pushed Brent crude futures to a six-month high of $74 per barrel. Iran also reported production cuts at the South Pars gas field due to fire damage, while Israel halted over 60 per cent of its natural gas output amid security concerns. The Strait of Hormuz remains a critical chokepoint for global energy flows, with 25 per cent of the world’s oil supply passing through the narrow waterway. “While fundamentals point to a well-supplied market, these recent developments are a stark reminder of the ongoing geopolitical fragility in oil markets,” Birol warned. Refining and inventory trends With oil demand for combustion fuels nearing a peak, global refining capacity is projected to exceed demand for refined products by 2030. This imbalance may lead to more refinery closures, especially in mature markets. Refinery throughput is forecast to rise modestly by around 460 kb/d annually in 2025 and 2026, reaching 83.7 mb/d. Oil inventories have been rising steadily, with global stocks surging by 93 million barrels in May alone. Despite this, OECD inventories remain 97 million barrels below 2024 levels, reflecting ongoing volatility in market sentiment. In the absence of major disruptions, the IEA projects a stable, oversupplied oil market through 2030. Yet, the shadow of geopolitical conflict and the energy transition underscores a fragile balance. As Birol concluded, “There is no room for complacency when it comes to energy security.”

The report warns, however, that mounting geopolitical risks, notably the intensifying Israel-Iran conflict, continue to pose a threat to supply security despite strong fundamentals.

Oil market set for oversupply through 2030, says IEA amid geopolitical tensions

India is set to surpass China as the primary driver of global oil demand growth over the next decade, according to a new report by Moody’s Ratings. The shift comes as China approaches peak crude consumption, driven by slower economic growth and accelerated adoption of new energy vehicles (NEVs), while India continues to experience robust energy demand growth supported by economic expansion and infrastructure development.Moody’s projects India’s crude oil consumption to grow annually at 3-5 per cent over the next 3-5 years, compared to China’s marginal growth during the same period. China’s oil demand is expected to peak at around 800 million tonnes per annum (mtpa) by 2030, while India’s demand trajectory remains upward, underscoring a significant transformation in global energy dynamics.&nbsp;What is fuelling India’s demand?&nbsp;India, currently the world’s third-largest oil consumer behind the United States and China, is planning a major expansion of its refining capacity to meet rising domestic fuel demand. Refining capacity is projected to increase by 20 per cent to 309.5 mtpa by 2030 from 256.8 mtpa as of April 2024, driven by investments from state-owned oil marketing companies such as Indian Oil Corporation Ltd, Bharat Petroleum Corporation Ltd, and Hindustan Petroleum Corporation Ltd.Rising industrialisation, rapid urbanisation, and massive government-led infrastructure investments are expected to boost transportation fuel demand, particularly for petrol and diesel. At the same time, demand for petrochemical products will also rise in tandem with broader economic development.In contrast, China’s refining capacity is nearing a state-imposed cap of 1 billion tonnes, curbing further growth potential. With the country’s pivot toward cleaner energy sources, including solar, wind, and electric vehicles, consumption of traditional fuels like gasoline and diesel is set to decline, although demand for jet fuel and naphtha may still grow due to rising air travel and chemical production.&nbsp;India’s import dependence to rise&nbsp;Despite its growing consumption, India’s domestic oil and gas production remains a weak link. Moody’s warns that if India cannot reverse its declining output from ageing oil fields and limited exploration investment, its reliance on imports will rise further. Currently, India imports nearly 90 per cent of its crude oil and around 50 per cent of its natural gas requirements, raising concerns about long-term energy security.In contrast, China, which imports over 70 per cent of its crude and 35–40 per cent of its gas needs, is actively working to reduce import dependency through heavy investment in domestic shale gas and offshore exploration projects. As a result, Chinese national oil companies (NOCs) are expected to outperform their Indian peers in production growth over the next 3-5 years.Chinese NOCs also benefit from greater vertical integration, which Moody’s says reduces earnings volatility, along with stronger financial metrics such as lower leverage and higher interest coverage. In India, weaker integration, ageing infrastructure, and policy-related earnings swings have made national firms more vulnerable.&nbsp;Green energy transition&nbsp;Moody’s report highlights a significant policy divergence between the two Asian giants. China’s energy policies are more market-oriented and focused on enhancing self-sufficiency, while India’s regulatory framework still heavily influences fuel prices, often leading to volatile earnings for Indian NOCs.Additionally, India relies more on taxes and dividends from its petroleum sector to fund its fiscal deficit, increasing political sensitivity around fuel prices.Environmental policies are also advancing at different speeds. Chinese NOCs are under greater regulatory pressure to transition to greener practices, while India’s carbon regulations are still evolving. This means Indian firms currently face less immediate pressure to invest in low-carbon technologies, though such pressures are likely to grow in the coming years as global climate commitments intensify.Meanwhile, India is pushing to increase the share of natural gas in its energy mix from 6 to 15 per cent by 2030. Gas is seen as a critical transition fuel, particularly for sectors like fertilisers and petrochemicals, and for urban energy use via piped and compressed natural gas.Gas demand in India is expected to grow by 4-7 per cent annually through the decade, outpacing China’s gas demand growth rate. However, challenges remain in improving domestic gas infrastructure and maintaining affordability, especially against the backdrop of rapidly falling renewable energy prices.As China transitions toward a lower-carbon, more self-sufficient energy economy, India’s growing appetite for oil and gas places it at the centre of global energy markets. However, India’s growing dependence on imports and lag in domestic production pose risks to its energy security and economic stability.While India is set to be the engine of global oil demand growth, its long-term sustainability will depend on policy reforms, infrastructure development, and investments in domestic exploration and green energy.According to Moody’s, the ability of Indian NOCs to execute production plans and manage volatility will be crucial in determining the country’s success in navigating the next decade of energy transition.

The shift comes as China approaches peak crude consumption, driven by slower economic growth and accelerated adoption of new energy vehicles, while India continues to experience robust energy demand growth supported by economic expansion and infrastructure development.

India is set to surpass China as the primary driver of global oil demand growth over the next decade, according to a new report by Moody’s Ratings. The shift comes as China approaches peak crude consumption, driven by slower economic growth and accelerated adoption of new energy vehicles (NEVs), while India continues to experience robust energy demand growth supported by economic expansion and infrastructure development. Moody’s projects India’s crude oil consumption to grow annually at 3-5 per cent over the next 3-5 years, compared to China’s marginal growth during the same period. China’s oil demand is expected to peak at around 800 million tonnes per annum (mtpa) by 2030, while India’s demand trajectory remains upward, underscoring a significant transformation in global energy dynamics. What is fuelling India’s demand? India, currently the world’s third-largest oil consumer behind the United States and China, is planning a major expansion of its refining capacity to meet rising domestic fuel demand. Refining capacity is projected to increase by 20 per cent to 309.5 mtpa by 2030 from 256.8 mtpa as of April 2024, driven by investments from state-owned oil marketing companies such as Indian Oil Corporation Ltd, Bharat Petroleum Corporation Ltd, and Hindustan Petroleum Corporation Ltd. Rising industrialisation, rapid urbanisation, and massive government-led infrastructure investments are expected to boost transportation fuel demand, particularly for petrol and diesel. At the same time, demand for petrochemical products will also rise in tandem with broader economic development. In contrast, China’s refining capacity is nearing a state-imposed cap of 1 billion tonnes, curbing further growth potential. With the country’s pivot toward cleaner energy sources, including solar, wind, and electric vehicles, consumption of traditional fuels like gasoline and diesel is set to decline, although demand for jet fuel and naphtha may still grow due to rising air travel and chemical production. India’s import dependence to rise Despite its growing consumption, India’s domestic oil and gas production remains a weak link. Moody’s warns that if India cannot reverse its declining output from ageing oil fields and limited exploration investment, its reliance on imports will rise further. Currently, India imports nearly 90 per cent of its crude oil and around 50 per cent of its natural gas requirements, raising concerns about long-term energy security. In contrast, China, which imports over 70 per cent of its crude and 35–40 per cent of its gas needs, is actively working to reduce import dependency through heavy investment in domestic shale gas and offshore exploration projects. As a result, Chinese national oil companies (NOCs) are expected to outperform their Indian peers in production growth over the next 3-5 years. Chinese NOCs also benefit from greater vertical integration, which Moody’s says reduces earnings volatility, along with stronger financial metrics such as lower leverage and higher interest coverage. In India, weaker integration, ageing infrastructure, and policy-related earnings swings have made national firms more vulnerable. Green energy transition Moody’s report highlights a significant policy divergence between the two Asian giants. China’s energy policies are more market-oriented and focused on enhancing self-sufficiency, while India’s regulatory framework still heavily influences fuel prices, often leading to volatile earnings for Indian NOCs. Additionally, India relies more on taxes and dividends from its petroleum sector to fund its fiscal deficit, increasing political sensitivity around fuel prices. Environmental policies are also advancing at different speeds. Chinese NOCs are under greater regulatory pressure to transition to greener practices, while India’s carbon regulations are still evolving. This means Indian firms currently face less immediate pressure to invest in low-carbon technologies, though such pressures are likely to grow in the coming years as global climate commitments intensify. Meanwhile, India is pushing to increase the share of natural gas in its energy mix from 6 to 15 per cent by 2030. Gas is seen as a critical transition fuel, particularly for sectors like fertilisers and petrochemicals, and for urban energy use via piped and compressed natural gas. Gas demand in India is expected to grow by 4-7 per cent annually through the decade, outpacing China’s gas demand growth rate. However, challenges remain in improving domestic gas infrastructure and maintaining affordability, especially against the backdrop of rapidly falling renewable energy prices. As China transitions toward a lower-carbon, more self-sufficient energy economy, India’s growing appetite for oil and gas places it at the centre of global energy markets. However, India’s growing dependence on imports and lag in domestic production pose risks to its energy security and economic stability. While India is set to be the engine of global oil demand growth, its long-term sustainability will depend on policy reforms, infrastructure development, and investments in domestic exploration and green energy. According to Moody’s, the ability of Indian NOCs to execute production plans and manage volatility will be crucial in determining the country’s success in navigating the next decade of energy transition.

The shift comes as China approaches peak crude consumption, driven by slower economic growth and accelerated adoption of new energy vehicles, while India continues to experience robust energy demand growth supported by economic expansion and infrastructure development.

India to drive global oil demand growth as China nears peak: Moody’s

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Oil market set for oversupply through 2030, says IEA amid geopolitical tensions

India to drive global oil demand growth as China nears peak: Moody’s