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The IEA predicts that the oil market could see a surplus of one million barrels of crude oil per day by 2025.
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The surplus will be caused by low demand in China and booming production from non-OPEC countries.
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Non-OPEC producers are on track to expand production by 1.5 million barrels per day, the IEA estimates.
According to the International Energy Agency, the oil market could see a large supply surplus by 2025 thanks to booming production from non-OPEC states such as the US and declining demand in China.
The IEA said in its November Oil Market Report that the world oil market is on track for a surplus of one million barrels per day next year.
The surplus is largely caused by a weakening economy in China. IEA data shows oil demand in the world's second-largest economy shrank for six straight months from September. This was the cause of the “headache” on demand this year, the report said.
Meanwhile, the agency forecasts strong oil production among non-OPEC producers led by countries such as the US, Guyana, Argentina and Brazil.
Overall, non-OPEC producers are on track to expand oil production by 1.5 million barrels per day, it is estimated. That amount is more than the agency's forecast that global oil consumption will grow by 990,000 barrels per day next year.
OPEC+, the oil cartel led by Saudi Arabia, has also said it will scale back production cuts of 2.2 million barrels per day that have squeezed supply in recent years. According to the latest announcement, the group could start lifting its production quotas as early as January.
“Our current balance sheet suggests that even if OPEC+ cuts remain in place, global supply will exceed demand by more than 1 million barrels per day next year. With supply risks rampant, a looser balance would provide much-needed stability to a market that has been roiled by the Covid pandemic, Russia's large-scale invasion of Ukraine and, most recently, heightened unrest in the Middle East ,” the IEA added.
The U.S. has become the world's largest oil producer, pumping more crude oil for the past six years in a row than any other country in history, according to the U.S. Energy Information Administration. Domestic production reached a record 13.4 million barrels per day in August, according to data from the Energy Information Administration.
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