Economic headwinds and record electric vehicle sales are set to materially slow down global oil demand growth for the rest of the year, the International Energy Agency (IEA) said on Thursday.
World oil demand rose by 990,000 barrels per day (bpd) in the first quarter of 2025. But the remainder of the year will see demand growth at just 650,000 bpd, the agency said in its closely-watched monthly Oil Market Report for May.
Concerns about economic growth and record sales of EVs are set to dent global oil demand growth for the rest of the year, and the IEA reckons that in full 2025, demand growth will average 740,000 bpd.
The full-year demand growth estimate is slightly higher compared to last month’s estimate of 730,000 bpd growth. Last month’s projection was slashed by 300,000 bpd from the IEA’s forecast from March, following the U.S. tariff offensive in early April.
In the latest assessment in mid-May, the IEA expects much slower growth in the coming quarters compared to the first quarter of 2025.
The estimate for full-year 2026 demand growth is also close to the 2025 forecast and to last month’s already slashed projections—760,000 bpd.
Despite the U.S.-China trade de-escalation from earlier this week, “increased trade uncertainty is expected to weigh on the world economy and, by extension, oil demand,” the IEA said today.
The agency noted that signs of a slowdown in global oil demand growth may already be emerging and will be tracked closely. Following a relatively robust first quarter, the latest data for China and India have been weaker than expected, the IEA said.
Due to the decline in oil prices and signals from the U.S. shale industry that it would be lowering capital spending and trimming rig counts, the agency lowered its forecast for U.S. shale production for the second month in a row.
On Wednesday, OPEC also cut its forecast of liquids supply from OPEC+’s rivals – including the United States, due to lower upstream spending amid falling oil prices. Supply from producers outside the OPEC+ pact is set to increase by 800,000 bpd in 2025, down by 100,000 bpd compared to OPEC’s assessment of 900,000-bpd growth last month.