Fresh US sanctions on Russia’s oil exports have yet to impact supply, the International Energy Agency said on Thursday.
“Fresh US sanctions on Russia and Iran roiled markets at the start of the year but they have yet to materially impact global oil supply,” IEA said in its February Oil Market Report.
Iranian crude oil exports are only marginally lower while Russian flows, so far, continue largely unaffected.
Global oil upply
The Americas will lead the non-OPEC+ oil supply expansion this year. The expected growth of 1.4 million barrels per day will surpass the projected increase in demand comfortably.
“However, improved OPEC+ compliance with agreed targets is slowly chipping away at this year’s projected supply surplus,” the Paris-based energy watchdog said.
The agency said global oil supply plunged by 950,000 barrels per day to 102.7 million barrels a day in January. The decline was due to seasonally colder weather in North America, which hit production.
However, oil production worldwide was still 1.9 million barrels per day higher in January compared with the corresponding period a year ago.
Global oil supply is expected to increase by 1.6 million barrels per day in 2025 to 104.5 million barrels.
Countries outside the Organization of the Petroleum Exporting Countries and allies are likely to contribute the bulk of this supply growth.
OPEC and its allies confirmed earlier this month that the group will raise oil production by unwinding some of its voluntary output cuts from April.
Oil demand outlook
IEA has raised its forecast for growth in global crude oil demand for 2025 slightly to 1.1 million barrels per day.
Oil demand grew by just 870,000 barrels per day in 2024.
“China will marginally remain the largest source of growth, even as the pace of its expansion is a fraction of recent trends and driven almost entirely by its petrochemical sector,” the agency said.
At the same time, India and other emerging Asian economies are taking up increasing shares.
OECD demand is forecast to return to structural decline following a modest increase last year.
China leads growth in 2025, driven entirely by the petrochemical sector. However, its share of the global increase has fallen to 19%, compared with 60% over the previous decade.
India and other Asian countries are contributing an increasing share of growth, with a combined 500,000 barrels per day.
Meanwhile, OPEC in its own monthly report released on Wednesday kept forecasts for demand growth unchanged from the previous month.
OPEC expects crude oil demand growth in 2025 at 1.45 million barrels per day.
Oil prices and trade flows
“Global oil markets were whipsawed in January as sharply higher prices at the start of the year gave way to myriad pressure points,” IEA said.
Prices initially surged in early January due to anxiety over potential supply disruptions caused by new sanctions on Russia and Iran.
However, market sentiment quickly shifted, and concerns over the global economy and emerging trade wars took center stage, impacting the pace of oil demand growth.
ICE Brent future prices initially rallied to a five-month high of over $82 per barrel in early January, but escalating international trade tensions subsequently pushed prices back down to around $75 per barrel.
At the time of writing, the Brent crude oil contract was trading at $74.58 a barrel.
The long-term impacts of escalating sanctions on Iran and Russia, as well as the effects of new US tariffs and their anticipation on trade flows, remain uncertain, according to IEA.
The agency added:
But time and again, oil markets have shown remarkable resilience and adaptability in the face of major challenges – and this time is unlikely to be different.
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