Summary:
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. < MY TAKE: The market's reaction to the OPEC+ quota increases was overblown. The addition oil supply increase is a "rounding error".
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. < I think non-OPEC+ growth could go negative by year-end if WTI stays in the $60s.
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.
IEA Oil Market Report - May 21
IEA Oil Market Report - May 21
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: IEA Oil Market Report - May 21
Note today (5/22) from Keith Kohl with my comments in blue.
----------------------------
The IEA’s Bombshell Oil Confession
Keith Kohl | May 22, 2025
Everyone has an agenda today.
I do. You do. Investors, Wall Street governments, media… everyone. And it’s up to us to be able to peer behind that curtain and see the truth behind every situation.
It’s no different in the oil and gas markets.
But this isn’t some devastating revelation. We’ve known for years that there’s been a war over controlling the narrative for oil prices. Unfortunately, that manipulation is simply a part of the game that’s played.
The good part is that it’s rather easy for us to recognize those biases for what they are. After all, we both have the same interest — to capitalize on opportunities in the market.
In recent years, the narrative battle was aggressively waged between the IEA and OPEC. Each pushed their own agenda against the other, OPEC yearning for higher oil prices to generate more revenue and the IEA desperate to push its green transition. < IEA consistently has understated global oil demand simply because they are based in Paris and the people that sign their paychecks are Climate Change Wackos.
The only problem is that one of them has been lying to us for years, and now they're finally coming clean and admitting a harsh truth for the world to accept.
The IEA’s Bombshell Oil Confession
The veteran members of our investment community here know that I rarely say, “I told you so,” or any type of gloating when proven right… rarely.
For years, I believed there was a significant disconnect between the oil markets and reality, driven by overly bearish sentiment concerning the supply/demand fundamentals in the oil market. < Remember all the "Peak Demand" forecasts based on the belief that we'd all be driving EV's by 2030.
My biggest gripe has always been with the IEA. The IEA’s net zero roadmap was never based in reality, yet that didn’t stop them from consistently putting out bearish demand forecasts over the last few years.
Keep in mind, every time one of those forecasts were released, it directly put downward pressure on oil prices.
So, you can imagine our utter lack of surprise recently when the IEA came out and openly said their numbers were wrong.
In its latest Oil Market Report, the IEA quietly made some historical revisions to what it reported a few years ago. In fact, the IEA said its previous demand numbers for 2022 were 250,000 barrels per day more than they reported, as well as 330,000 barrels per day more than reported in 2023, and 350,000 barres per day more than reported in 2024.
The IEA just kept getting worse at reporting numbers that were relied upon by analysts, companies, the global economy, and more importantly… US!
That’s right, just one stroke of the keyboard and those inventory builds that were reported over the last few years simply vanished into thin air.
But why would they ever want to present facts that were counter to their chosen agenda.
Now it’s time for some payback.
Profiting From the IEA’s Oil Confession
Is the IEA having its come-to-Jesus moment?
Not exactly, but it’s close enough. You see, along with the IEA’s confession over misreporting demand numbers for the past three years, it has also coincidentally raised its demand projections for 2025 to 741,000 barrels per day, then another 760,000 barrels per day in 2026.
Meanwhile, the IEA boosted its economic projections, and now expects the global economy to grow by 2.8% annual over the next two years. < Even IEA has to admit that FEAR of the Tariff War is way overblown. There is no evidence of a global recession on the horizon.
You know it's a sad day when OPEC one-ups someone on transparency. OPEC still sees global demand will rise by 1.3 million barrels per day this year.
But this goes beyond the demand side of the equation. The IEA’s projections still feel overly optimistic on non-OPEC supply growth. Is it only a matter of time before we see the IEA go back and change their numbers again? Perhaps. < The BIG Paradigm Shift that will cause oil prices to rebound and move over $75/bbl in 2026, is that non-OPEC oil production grow has stopped. U.S. oil production will likely decline a bit in 2H 2025.
The longer crude prices stay in the low-$60/bbl range, the larger the impact it will have on U.S. output over the medium- and long-term.
So what will it take to push oil prices higher?
At this point, I think you know the answer is: Not much. < This is true simply because FEAR based pullbacks in the oil price never last long.
This goes for the entire spectrum of catalysts that are at hand, from leaks of Israel’s imminent strike against Iran’s nuclear facility, or further acceptance from permabears like the IEA that oil demand is simply far healthier and stronger than they previously thought.
That alone will set up oil stocks for one helluva run this summer.
My only question is: Is your portfolio prepared?
----------------------------
The IEA’s Bombshell Oil Confession
Keith Kohl | May 22, 2025
Everyone has an agenda today.
I do. You do. Investors, Wall Street governments, media… everyone. And it’s up to us to be able to peer behind that curtain and see the truth behind every situation.
It’s no different in the oil and gas markets.
But this isn’t some devastating revelation. We’ve known for years that there’s been a war over controlling the narrative for oil prices. Unfortunately, that manipulation is simply a part of the game that’s played.
The good part is that it’s rather easy for us to recognize those biases for what they are. After all, we both have the same interest — to capitalize on opportunities in the market.
In recent years, the narrative battle was aggressively waged between the IEA and OPEC. Each pushed their own agenda against the other, OPEC yearning for higher oil prices to generate more revenue and the IEA desperate to push its green transition. < IEA consistently has understated global oil demand simply because they are based in Paris and the people that sign their paychecks are Climate Change Wackos.
The only problem is that one of them has been lying to us for years, and now they're finally coming clean and admitting a harsh truth for the world to accept.
The IEA’s Bombshell Oil Confession
The veteran members of our investment community here know that I rarely say, “I told you so,” or any type of gloating when proven right… rarely.
For years, I believed there was a significant disconnect between the oil markets and reality, driven by overly bearish sentiment concerning the supply/demand fundamentals in the oil market. < Remember all the "Peak Demand" forecasts based on the belief that we'd all be driving EV's by 2030.
My biggest gripe has always been with the IEA. The IEA’s net zero roadmap was never based in reality, yet that didn’t stop them from consistently putting out bearish demand forecasts over the last few years.
Keep in mind, every time one of those forecasts were released, it directly put downward pressure on oil prices.
So, you can imagine our utter lack of surprise recently when the IEA came out and openly said their numbers were wrong.
In its latest Oil Market Report, the IEA quietly made some historical revisions to what it reported a few years ago. In fact, the IEA said its previous demand numbers for 2022 were 250,000 barrels per day more than they reported, as well as 330,000 barrels per day more than reported in 2023, and 350,000 barres per day more than reported in 2024.
The IEA just kept getting worse at reporting numbers that were relied upon by analysts, companies, the global economy, and more importantly… US!
That’s right, just one stroke of the keyboard and those inventory builds that were reported over the last few years simply vanished into thin air.
But why would they ever want to present facts that were counter to their chosen agenda.
Now it’s time for some payback.
Profiting From the IEA’s Oil Confession
Is the IEA having its come-to-Jesus moment?
Not exactly, but it’s close enough. You see, along with the IEA’s confession over misreporting demand numbers for the past three years, it has also coincidentally raised its demand projections for 2025 to 741,000 barrels per day, then another 760,000 barrels per day in 2026.
Meanwhile, the IEA boosted its economic projections, and now expects the global economy to grow by 2.8% annual over the next two years. < Even IEA has to admit that FEAR of the Tariff War is way overblown. There is no evidence of a global recession on the horizon.
You know it's a sad day when OPEC one-ups someone on transparency. OPEC still sees global demand will rise by 1.3 million barrels per day this year.
But this goes beyond the demand side of the equation. The IEA’s projections still feel overly optimistic on non-OPEC supply growth. Is it only a matter of time before we see the IEA go back and change their numbers again? Perhaps. < The BIG Paradigm Shift that will cause oil prices to rebound and move over $75/bbl in 2026, is that non-OPEC oil production grow has stopped. U.S. oil production will likely decline a bit in 2H 2025.
The longer crude prices stay in the low-$60/bbl range, the larger the impact it will have on U.S. output over the medium- and long-term.
So what will it take to push oil prices higher?
At this point, I think you know the answer is: Not much. < This is true simply because FEAR based pullbacks in the oil price never last long.
This goes for the entire spectrum of catalysts that are at hand, from leaks of Israel’s imminent strike against Iran’s nuclear facility, or further acceptance from permabears like the IEA that oil demand is simply far healthier and stronger than they previously thought.
That alone will set up oil stocks for one helluva run this summer.
My only question is: Is your portfolio prepared?
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group