The International Energy Agency (IEA) has issued a warning regarding the impact of new US tariffs on global oil demand in 2025. In its recent monthly oil market report, published on March 13, the agency suggested that the economic pressures stemming from these tariffs could overshadow any potential benefits from declining oil prices.
The report indicates that world oil supply is expected to exceed demand by 600,000 barrels per day (b/d) in 2025, a revision of 100,000 b/d from previous forecasts. The IEA has adjusted its oil demand projections for 2025, now estimating it will reach 103.91 million b/d, which is 90,000 b/d lower than last month’s prediction.
This downgrade is attributed to disappointing consumption data and a negative macroeconomic outlook, marking the end of three consecutive months of improving forecasts for oil consumption. The report identifies the new US tariffs, particularly those affecting Canada, Mexico, and Chinese goods, as a significant risk for global oil demand.
With high-profile tariffs set to take effect on April 1, concerns about the sustainability of fluctuating tariff measures are growing. The IEA warns of a potential stagflation scenario induced by these tariffs, which may adversely impact oil demand, especially in emerging markets and China.
Despite the sombre predictions, lower oil prices are being viewed as a potential support for emerging markets, leading to improved year-on-year growth expectations for 2025. However, the IEA’s supply outlook for 2025 remains steady at 104.5 million b/d, contingent on OPEC+ producers continuing their planned voluntary production cuts.
The agency has noted that while compliance with these cuts remains uncertain, a full unwinding of voluntary measures could significantly boost supply figures in the coming years.