OPEC Lowers Oil Demand Forecast Amid U.S. Tariff Disputes and Market Instability
Global oil demand growth outlook revised down as trade tensions and economic uncertainty take a toll.
The Organization of the Petroleum Exporting Countries (OPEC) has lowered its global oil demand growth forecast for 2025, citing growing economic pressures from the ongoing U.S. trade tariffs and heightened market instability.
In its April Monthly Oil Market Report, OPEC revised its oil demand growth projection to 1.3 million barrels per day (bpd) for 2025, a decrease from the previous forecast of 1.4 million bpd. This marks a 150,000 bpd reduction from the earlier estimates released just a month ago.
Economic Pressures from U.S. Trade Tariffs
OPEC highlighted that the market’s strain is evident in the recent drop in oil prices. As of Monday, the price of the OPEC oil basket fell to $66.25 per barrel, down from $70.85 the previous Friday.
The U.S. trade tariff policies, especially those impacting Nigeria and other oil-exporting nations, have contributed to investor anxiety. Although these tariffs are temporarily suspended for 90 days, they have already caused significant disruptions in global trade, raised consumer costs, and slowed down manufacturing activities worldwide.
Revised Global Economic Growth Projections
In light of the economic challenges, OPEC has also downgraded its global economic growth forecasts. The group now expects 3.0% growth in 2024, down from the previous estimate of 3.1%, and 3.1% growth in 2025, a slight reduction from 3.2%. OPEC acknowledged that while there were early signs of economic stability this year, recent trade developments have created “higher uncertainty” in the short-term outlook.
Despite these challenges, oil prices managed to stabilize following the report’s release, with Brent crude holding steady around $66 per barrel. However, oil prices have still dropped by over 10% for the month of April.
Diverging Views: OPEC vs. IEA on Long-Term Demand
OPEC maintains a relatively optimistic long-term outlook for oil demand, which contrasts with the International Energy Agency’s (IEA) forecast. The IEA anticipates a peak in global oil consumption later this decade, as the world shifts toward cleaner energy sources.
The IEA is expected to update its demand outlook on Tuesday, which could further clarify the global energy transition trends.
OPEC+ Output Adjustments
Meanwhile, OPEC+, which includes countries like Russia, Saudi Arabia, and Iraq, saw a 37,000 bpd drop in its overall output for March, settling at 41.02 million bpd. The reduction was largely attributed to production cuts from Nigeria and Iraq.
Despite this, Kazakhstan overproduced by 37,000 bpd in March, raising its output to 1.852 million bpd — well above its 1.468 million bpd target. Kazakhstan’s energy ministry has acknowledged this overproduction and has committed to meeting its quota in April while compensating for earlier excesses.
OPEC+ Sets Flexible Production Increases
In early April, key OPEC+ members, including Saudi Arabia, Russia, Iraq, and Kazakhstan, met virtually to discuss market conditions. The group agreed to gradually increase output by 411,000 bpd in May 2025, with three monthly increments. However, OPEC+ emphasized that these increases are flexible and could be halted or reversed depending on how the market evolves.
The coalition is scheduled to reconvene on May 5 to finalize production targets for June 2025.
