Oil Market Report - May 2025

• Global oil demand growth is projected to slow from 990 kb/d in 1Q25 to 650 kb/d for the remainder of the year as economic headwinds and record EV sales curb use. Demand growth averages 740 kb/d in 2025 and 760 kb/d in 2026, despite accelerating OECD declines of -120 kb/d and -240 kb/d, respectively.
• World oil supply looks on track to rise by 1.6 mb/d to 104.6 mb/d on average in 2025, and by an additional 970 kb/d in 2026. Non-OPEC+ producers are set to add 1.3 mb/d this year and 820 kb/d next year, even as US LTO supply has been reduced. Based on the latest plans, OPEC+ will add 310 kb/d of extra supply this year and 150 kb/d in 2026.
• Refinery throughput forecasts for 2025 and 2026 are broadly unchanged from last month’s Report at 83.2 mb/d and 83.6 mb/d, respectively. Annual gains of around 400 kb/d in both years are driven exclusively by non-OECD regions. Refining margins reached 12-month highs across most regions and configurations in late April, as a discernible shift in crude pricing boosted profitability.
• Global oil stocks rose by 25.1 mb in March, led by a 57.8 mb increase in crude, but at 7 671 mb remained well below the five-year average (-221 mb). Total OECD inventories increased by 3.1 mb, while non-OECD stocks rose by 21.3 mb and oil on water was up slightly by 0.7 mb. Preliminary data show global oil inventories built further in April.
• Benchmark crude oil prices fell by around $10/bbl over April and into May amid escalating US tariffs and larger-than-expected OPEC+ output hikes. Bearish sentiment eased somewhat after the US reached a trade deal with the UK on 8 May, and a 90-day accord with China on 12 May. Russian crude prices averaged $55.64/bbl in April with all major export grades below the $60/bbl price cap. At the time of writing, North Sea Dated was trading at around $66/bbl.
  

Oil prices resumed their downward trajectory in late April and early May as trade tensions impacted financial and commodity markets and OPEC+ agreed to a further unwinding of production cuts. Bearish sentiment subsequently eased somewhat after the United States reached a trade deal with the United Kingdom on 8 May, and a 90-day accord with China on 12 May. Nonetheless, increased trade uncertainty is expected to weigh on the world economy and, by extension, oil demand. Brent crude oil futures slumped by $14/bbl in April to a four-year low of just above $60/bbl by early May, before rebounding to around $66/bbl at the time of writing.

Signs of a slowdown in global oil demand growth may already be emerging and will be tracked closely. Following a relatively robust 1Q25, latest non-OECD delivery data, especially for China and India, have been weaker than expected. We now see growth at a more subdued rate of 650 kb/d for the remainder of 2025, resulting in an average annual increase of 740 kb/d – followed by a rise of 760 kb/d in 2026. Despite the recent soft patch, emerging economies remain the main driver of growth, adding 860 kb/d this year and 1 mb/d next year – in contrast to an accelerating decline in OECD countries of -120 kb/d and -240 kb/d, respectively.

Amid the weaker outlook for the world economy and global oil demand, OPEC+ surprised the market in early May by announcing a second consecutive monthly increase of 411 kb/d for June, effectively advancing the bloc’s production to levels it had previously scheduled for October 2025. The actual gain will be lower than the nominal figures, as a number of countries – including Kazakhstan, the UAE, Iraq and Russia – continue to produce above their targets, while others are constrained by capacity limits and some will make compensatory cuts for previous overproduction. Taking into account the new supply targets through June, OPEC+ looks set to pump an additional 310 kb/d this year and 150 kb/d in 2026. A further tightening of sanctions enforcement on Venezuela, Iran and Russia may yet offset some of those increases.

Meanwhile, one of the most immediate impacts of the recent slump in oil prices is expected to fall on US shale output. In their latest earnings calls, independent producers said they would opt to trim rig counts and shave up to 9% off previous 2025 capital expenditure guidance. As a result, we have lowered our forecast for US light tight oil production for the second month in row, by 40 kb/d in 2025 and 190 kb/d in 2026. US total supply growth is now assessed at 440 kb/d and 180 kb/d, respectively, reaching 20.9 mb/d in 2026. As US tight oil growth slows, conventional projects will underpin non-OPEC+ supply increases of 1.3 mb/d this year and 820 kb/d in 2026.

With the rises in global supply expected to considerably outpace demand growth, oil inventories are forecast to jump by an average of 720 kb/d this year and 930 kb/d next year, compared with a decline of 140 kb/d in 2024. This sets the stage for a further rebalancing of supply and demand fundamentals.