The International Energy Agency said global oil demand will grow at its slowest rate for five years in 2025, and U.S. production rises will also taper off due to U.S. President Donald Trump’s tariffs on trading partners and their retaliatory moves.
Trump's tariffs, along with a supply hike by OPEC+ producers, have driven a steep slide in oil prices this month, cutting revenue for producers. The U.S. oil industry, despite calls by Trump to "drill baby drill", may actually slow activity, the IEA said.
World oil demand this year will rise by 730,000 barrels per day, the IEA, which advises industrialised countries, said in a monthly report on Tuesday, a sharp cut from 1.03 million bpd expected last month. The reduction is larger than a cut made on Monday by producer group OPEC.
"The deteriorating outlook for the global economy amid the sudden sharp escalation in trade tensions in early April has prompted a downgrade to our forecast for oil demand growth this year," the IEA said.
"Roughly half of this downgrade occurs in the United States and China, with most of the remainder in trade-oriented Asian economies."
Growth of 730,000 bpd would be the lowest since 2020, when demand contracted due to the COVID-19 pandemic. Excluding the pandemic, it would be the lowest since 2019, when growth was 540,000 bpd, the IEA said in response to a Reuters question.
In its first look at 2026, the IEA predicted a further slowdown in demand growth to 690,000 bpd, due to a fragile economic backdrop and growing penetration of electric vehicles.
In China, economic challenges and a shift towards EVs are tempering oil growth prospects in the world's second-largest consumer, which had driven rises in oil consumption for years.
