In recent years, the global oil market has been navigating a series of challenges. One of the most pressing concerns is the marked slowdown in worldwide crude oil demand growth. Factors contributing to this trend include a decelerating global economy, the rapid adoption of electric vehicles, shifting policy priorities in Asian countries, and rising geopolitical tensions introducing further uncertainty.
The International Energy Agency (IEA) noted in its May report that while global oil demand is expected to rise by 990,000 barrels per day in Q1 2025, the momentum will likely taper off, with an average daily increase of just 740,000 barrels for that year, and 760,000 barrels in 2026. These figures stand in sharp contrast to the pre-pandemic norm, when annual growth often exceeded one million barrels per day. This signals a structural shift in demand, even as the global economy gradually recovers.
Historically, Asia—particularly China and India—has been the growth engine for oil demand. However, that tide is turning. According to the U.S. Energy Information Administration (EIA), Asia’s oil demand in 2025–2026 is projected to grow by only 500,000 barrels per day annually, down from earlier forecasts of 700,000. Slowing economic growth, alongside industrial upgrading and an aggressive push toward energy transition, is gradually weakening reliance on traditional energy sources.
Complicating matters further are geopolitical tensions and ongoing trade frictions. In March alone, global liquid fuel demand dropped by 1.3 million barrels per day, driven by declines in the Middle East, Europe, and Japan. Uncertainty around a potential rollback of OPEC+ production cuts and the ongoing Russia–Ukraine war has added further volatility to oil prices.
On the supply side, the IEA has raised its forecast for 2025 global oil supply growth to 1.6 million barrels per day. A significant portion of this will come from Saudi Arabia, which is helping to offset the slowdown in U.S. shale production. Yet, the pace of supply growth now far exceeds that of demand. While OPEC still anticipates demand in 2025 to grow by 1.3 million barrels per day—largely driven by transport, industrial, and agricultural activities in non-OECD countries—real-world data suggests a growing imbalance between supply and demand.
This supply glut is already pushing global commercial oil inventories higher. By 2025, daily inventory build-ups are expected to average 720,000 barrels, further weighing on prices. Brent crude, for instance, has fallen to a four-year low at one point since April, and although there’s been a slight rebound, prices remain below levels seen at the start of the year.
Looking ahead, the international oil market will likely face even more complexity and volatility. With global economic growth in a transitional phase and governments worldwide accelerating their clean energy agendas—particularly through faster EV adoption—the structure of fuel demand is changing. Investors will need to closely monitor key policy shifts, electric vehicle penetration rates, and any adjustments in OPEC+ production strategies to anticipate where oil prices are headed.
For investors in Hong Kong, this marks a pivotal moment. Crude oil remains a key driver of inflation, logistics, and corporate cost structures. Related ETFs and energy stocks will continue to reflect the shifting supply-demand dynamics. Staying alert and adjusting portfolio allocations proactively will be crucial in navigating future market changes.
