Jul 22, 2025
OPEC and IEA's projections for crude oil demand might be overly conservative.
A significant change in crude oil demand forecasts between this year and 2024 is that both OPEC and the International Energy Agency (IEA) are adopting a more cautious approach regarding growth expectations.
Although OPEC and the broader OPEC+ group assert that robust demand and a restricted market justify increased oil production, their monthly reports present a more reserved outlook.
The IEA mirrors this sentiment, predicting in its July report that global crude demand will grow by 700,000 barrels per day (bpd) in 2025, the slowest growth rate since 2009.
OPEC’s July report is slightly more optimistic, projecting an increase of 1.29 million bpd in 2025, with 1.16 million bpd from non-OECD countries.
Both organizations' forecasts are now so cautious that they risk being overly pessimistic, particularly in Asia, the largest importing region.
This contrasts sharply with last year, when OPEC was very optimistic about demand forecasts even as Asia's crude oil imports decreased.
There is a distinction between demand forecasts and actual imports, but seaborne imports primarily drive crude prices, influencing about 40% of global daily oil demand.
In its July 2024 report, OPEC estimated that non-OECD Asia's oil demand would increase by 1.34 million bpd in 2024, with China contributing 760,000 bpd.
However, Asia's crude imports fell in 2024 by 370,000 bpd to 26.51 million bpd, according to LSEG Oil Research data.
This marked the first decline in Asia's oil imports since 2021, coinciding with COVID-19 pandemic lockdown impacts on demand.
The disparity between OPEC's optimistic forecasts for 2024 and the actual decline in Asia's crude imports may have influenced their 2025 predictions.
A question arises whether the current forecasts are overly cautious.
In OPEC’s July report, non-OECD Asia's oil demand is expected to rise by 610,000 bpd in 2025, with China contributing 210,000 and India, the second-largest crude importer in Asia, increasing by 160,000 bpd.
The IEA forecasts a rise in China's total oil product demand by 81,000 bpd in 2025, while India’s is expected to gain 92,000 bpd. Overall, non-OECD Asia is predicted to see a demand rise of 352,000 bpd.
Both organizations’ projections seem modest, especially since Asia's crude imports exhibited relatively strong growth in the first half of 2025.
During the first six months, Asia's imports reached 27.25 million bpd, an increase of 510,000 bpd from the previous year, based on LSEG data.
There was an increase in imports during the second quarter, particularly in China, as refiners capitalized on the declining oil prices at the time.
Some of the increase in oil imports may have been directed towards building inventories, a trend that could continue into the second half if oil prices remain low while OPEC+ boosts production amid uncertainties from ongoing trade tensions initiated by U.S. President Donald Trump.
The key takeaway from this year's cautious oil demand forecasts compared to last year's optimistic estimates is that price significantly influences demand, especially in Asia.
One reason for the shortfall in Asia's crude imports in 2024 was the persistently high prices, which exceeded $92 a barrel in April and briefly dipped below $70 in September.
This year, prices have been softer, with Brent futures peaking slightly above $82 a barrel in January and dropping to as low as $58.50 in May.
Although OPEC and the broader OPEC+ group assert that robust demand and a restricted market justify increased oil production, their monthly reports present a more reserved outlook.
The IEA mirrors this sentiment, predicting in its July report that global crude demand will grow by 700,000 barrels per day (bpd) in 2025, the slowest growth rate since 2009.
OPEC’s July report is slightly more optimistic, projecting an increase of 1.29 million bpd in 2025, with 1.16 million bpd from non-OECD countries.
Both organizations' forecasts are now so cautious that they risk being overly pessimistic, particularly in Asia, the largest importing region.
This contrasts sharply with last year, when OPEC was very optimistic about demand forecasts even as Asia's crude oil imports decreased.
There is a distinction between demand forecasts and actual imports, but seaborne imports primarily drive crude prices, influencing about 40% of global daily oil demand.
In its July 2024 report, OPEC estimated that non-OECD Asia's oil demand would increase by 1.34 million bpd in 2024, with China contributing 760,000 bpd.
However, Asia's crude imports fell in 2024 by 370,000 bpd to 26.51 million bpd, according to LSEG Oil Research data.
This marked the first decline in Asia's oil imports since 2021, coinciding with COVID-19 pandemic lockdown impacts on demand.
The disparity between OPEC's optimistic forecasts for 2024 and the actual decline in Asia's crude imports may have influenced their 2025 predictions.
A question arises whether the current forecasts are overly cautious.
In OPEC’s July report, non-OECD Asia's oil demand is expected to rise by 610,000 bpd in 2025, with China contributing 210,000 and India, the second-largest crude importer in Asia, increasing by 160,000 bpd.
The IEA forecasts a rise in China's total oil product demand by 81,000 bpd in 2025, while India’s is expected to gain 92,000 bpd. Overall, non-OECD Asia is predicted to see a demand rise of 352,000 bpd.
Both organizations’ projections seem modest, especially since Asia's crude imports exhibited relatively strong growth in the first half of 2025.
During the first six months, Asia's imports reached 27.25 million bpd, an increase of 510,000 bpd from the previous year, based on LSEG data.
There was an increase in imports during the second quarter, particularly in China, as refiners capitalized on the declining oil prices at the time.
Some of the increase in oil imports may have been directed towards building inventories, a trend that could continue into the second half if oil prices remain low while OPEC+ boosts production amid uncertainties from ongoing trade tensions initiated by U.S. President Donald Trump.
The key takeaway from this year's cautious oil demand forecasts compared to last year's optimistic estimates is that price significantly influences demand, especially in Asia.
One reason for the shortfall in Asia's crude imports in 2024 was the persistently high prices, which exceeded $92 a barrel in April and briefly dipped below $70 in September.
This year, prices have been softer, with Brent futures peaking slightly above $82 a barrel in January and dropping to as low as $58.50 in May.