Quarterly Oil and Gas Market Review Q2 2025: An Overview
In a significant development, the International Energy Agency (IEA) has released its Oil 2025: Analysis and Forecast to 2030 report, predicting a plateau in global oil demand by 2030. This forecast suggests a slowdown in overall growth, with demand increasing by about 2.5 million barrels per day (mb/d) by 2030, compared to the near-term growth of approximately 700,000 mb/d annually.
The report highlights several key drivers of demand, including the petrochemicals and aviation sectors, as well as emerging economies in India and Southeast Asia, which are expected to add around 2 mb/d by 2030. Despite this growth, the transport fuel demand is projected to decline due to structural shifts such as increased adoption of electric vehicles, behavioral changes, and evolving fuel use patterns.
On the supply side, the report forecasts a 5 mb/d increase in global oil supply capacity by 2030. This growth is primarily driven by ongoing production expansions, particularly in the Middle East, which remains central to global oil supply, accounting for about 30% of production and trade.
Upstream oil investment is projected to decline by around 5–6% in 2025, reflecting price volatility and cautious producer behaviour. This decline, coupled with the robust supply growth, sets the stage for market dynamics characterized by robust supply, geopolitical volatility, and evolving consumption patterns.
The IEA's forecast contrasts with some other projections that anticipate continued demand growth beyond 2030 but reflects the structural transitions underway in energy consumption. Notably, the forecast aligns with the US Energy Information Administration's short-term price projections for oil and gas.
In the first half of 2025, oil and gas prices registered moderate gains. However, a drop in prices was observed in early May due to weak demand, rising supply, and OPEC+ signaling plans to boost production in July. Brent crude ended Q1 2025 at US$76.08 per barrel, while WTI hit US$72.87 per barrel.
Looking ahead, the IEA forecasts that Brent crude will average US$66 in 2025 and US$59 in 2026. The refining sector may face increasing pressure as fuel demand flattens and high-cost plants become less competitive.
The IEA's report also predicts significant production increases in Natural Gas Liquids (NGLs), with the US, Saudi Arabia, and Canada seeing notable production growth. Ethane demand alone is expected to climb by 610,000 b/d to 5.2 mb/d by 2030, while LPG consumption is forecast to rise by 1.3 mb/d to 11.8 mb/d.
In summary, the IEA's forecast signals a shift in global oil market dynamics, with demand plateauing and supply growth outpacing demand. This forecast underscores the need for strategic investment and adaptation in the oil and gas industry to navigate these changing market conditions.
| Aspect | Forecast to 2030 | |-------------------------|------------------------------------------| | Oil Demand | Plateau by 2030; total +2.5 mb/d | | Oil Supply Capacity | +5 mb/d increase by 2030 | | Key Demand Drivers | Petrochemicals, aviation, emerging markets (India, SE Asia) | | Key Supply Region | Middle East (~30% of global production) | | Upstream Investment | Decline by 5–6% in 2025; cautious approach|
The IEA's forecast reveals a significant increase in Natural Gas Liquids (NGLs) production, particularly in the US, Saudi Arabia, and Canada.
The report also predicts a decline in upstream oil investment, reflecting price volatility and a cautious approach by producers, which may impact the finance sector's engagement with the oil-and-gas Industry.
