As the global energy sector navigates geopolitical complexities and economic uncertainties, Indian Petroleum and Natural Gas Minister Hardeep Singh Puri has underscored a key shift in the oil market: supply is outpacing demand. Speaking ahead of the India Energy Week in Delhi (February 11-14, 2025), Puri remarked that "there is more oil in the market than takers," reinforcing a growing consensus among analysts and industry stakeholders.
India, the world&rsquo;s third-largest oil importer, has actively diversified its energy sources, increasing its supplier base from 27 to 39 countries. This move has been aimed at securing more cost-effective crude imports amid fluctuating global prices. While ongoing geopolitical tensions typically raise concerns about supply disruptions, Puri stressed that the current surplus suggests oil prices could ease in the coming months.
IEA and McKinsey Validate Market Surplus
Puri&rsquo;s statement aligns with the latest reports from the International Energy Agency (IEA) and McKinsey &amp; Company. The IEA&rsquo;s February 2025 outlook confirms that global oil production is currently exceeding demand, driven by rising non-OPEC output and the phased relaxation of OPEC+ production cuts. Global oil supply is forecasted to increase by 1.8 million barrels per day (mb/d) in 2025, reaching 104.7 mb/d&mdash;up from 660,000 barrels per day (kb/d) in 2024. Notably, non-OPEC+ production is set to rise steadily, with output expected to reach 54.6 mb/d in 2025.
McKinsey&rsquo;s January 2025 market analysis further supports the surplus narrative. Brent crude prices averaged $73.9 per barrel in December, showing only a marginal month-on-month decline. The report highlights a steady rise in global liquids demand, which reached 104.7 mb/d in December, partly due to seasonal heating needs in the Northern Hemisphere. However, overall market dynamics suggest an increasing supply buffer.
Key findings from McKinsey&rsquo;s report include:
<ul type="disc">
<li class="MsoNormal">OPEC+ Strategy:&nbsp;OPEC 9 production (excluding Iran, Venezuela, and Libya) remained steady at 26.9 mb/d, with the group set to unwind its 2.2 mb/d production cuts starting in April 2025.</li>
<li class="MsoNormal">Non-OPEC Output:&nbsp;Non-OPEC production (excluding U.S. shale) slightly increased to 61.9 mb/d, with gains in Canada and the U.S. Gulf of Mexico offsetting declines in Brazil and China.</li>
<li class="MsoNormal">U.S. Shale Stability:&nbsp;U.S. shale production held steady at 8.9 mb/d, with an active rig count of 565 in December&mdash;an increase of five from the previous month.</li>
<li class="MsoNormal">Inventory Trends:&nbsp;Global commercial inventories saw a modest decline of 6 million barrels in December, largely due to lower OECD stock levels. Despite this, total inventories have remained stable at approximately 4.5 billion barrels over the past four months.</li>
<li class="MsoNormal">Market Sentiment:&nbsp;While 2024 saw a slight market undersupply&mdash;global liquids production averaged 102.6 mb/d against a consumption rate of 102.8 mb/d&mdash;the outlook for 2025 suggests a more pronounced oversupply.</li>
</ul>
A Global Market Poised for Price Adjustments
With production set to increase and demand growth moderating, the global oil market appears poised for a potential softening of prices. The anticipated unwinding of OPEC+ production cuts and rising non-OPEC supply could put downward pressure on crude prices, benefiting energy-importing nations like India. However, geopolitical factors and economic conditions remain key variables that could influence market dynamics.
As industry leaders convene at India Energy Week, the discussion will likely centre around managing this supply-demand imbalance and ensuring energy security amid evolving global conditions. Whether the current surplus translates into long-term stability or further volatility remains a critical question for the global energy sector in 2025 and beyond.
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Indian Oil Refinery and oil exploration off shore field (image source: Petroleum Ministry)

IEA and McKinsey confirm oil supply outpacing demand, signaling potential price adjustments

Global Oil Market Faces Oversupply as Demand Growth Moderates

IEA and McKinsey confirm oil supply outpacing demand, signaling potential price adjustments

February 9, 2025 | 11:59 IST