OIL MARKET 

QUEST FOR OIL MARKET STABILITY SPURS OUTPUT HIKE

The eight OPEC+ countries that had previously pledged additional voluntary production cuts, namely: Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria, and Oman, have reaffrmed their commitment to stabilise the oil market. 

Their review came amid a steady global economic outlook and relatively robust market fundamentals, underscored by low oil inventories. These conditions aligned with the decision taken in December 2024 to begin a gradual and flexible rollback of the 2.2 million barrels per day (bpd) in voluntary production cuts that had been in place. As part of this phased return, the eight countries agreed to raise production by 411,000 bpd in July 2025, compared to June levels.

The adjustment represents the third monthly increment in a series of gradual increases. However, the group emphasised that this schedule remains contingent on market dynamics. As a result, the increases may be paused or reversed, if necessary, thereby preserving flexibility to continue supporting global oil market stability. 

Importantly, the eight producers framed this decision not only as a market response but as an opportunity to accelerate compensation for previous overproduction. They reaffrmed their full commitment to the OPEC+ Declaration of Cooperation, including adherence to the voluntary cuts, which are being monitored by the Joint Ministerial Monitoring Committee (JMMC) as per the April 2024 meeting. 

Each of the countries also confirmed their intention to fully compensate for any volumes overproduced since January 2024. Monthly meetings will continue to be held to track conformity, market trends, and compensation status, with the next scheduled decision on August production set for 6 July 2025. 

EV OUTLOOK

Meanwhile, a significant development in the energy narrative emerged from the International Energy Agency (IEA) with the release of its Global EV Outlook 2025. In a departure from its prior projections, the agency revised its estimate for oil displacement by electric vehicles (EVs) under its Stated Policies Scenario (STEPS). While the 2024 outlook had anticipated EVs displacing around 6 million barrels per day (mbpd) of oil by 2030, the new estimate stands at just over 5 mbpd. Notably, the 2025 report omits the net zero emissions (NZE) scenario figure, which had previously forecast an 8.2 mbpd displacement.

The nearly 1 million bpd downward revision carries weight, especially with 2030 less than five years away. The IEA also sharply cut its US forecast for EV sales penetration by 2030 from roughly 55% to just 20%, reflecting anticipated policy rollbacks under the new administration, including changes to EV subsidies and fuel economy standards. 

In contrast, the agency still expects a European rebound, despite policy softening and a plateau in current sales. China, however, remains the outlier. Of the 17 million EVs sold globally in 2024, over 11 million (roughly 65%) were sold in China alone. The IEA expects China to account for more than 150 million EVs by 2030, or about 60% of global stock. 

Beyond regional trends, deeper structural questions loom. Much of the growth in EV adoption to date has been fuelled by direct and indirect government subsidies. It remains uncertain how consumer demand will evolve as financial incentives are rolled back or eliminated altogether. 

OIL DEMAND OUTLOOK

Tensions in the region could also have an impact on the oil markets in the short term, but the situation is too fluid to make a determination on the trajectory of oil production and price outlook. However, markets need OPEC+ stewardship more than ever. 

The latest forecasts hold global demand growth steady at 1.3 million bpd in 2025 year on year, unchanged from previous assessments.

OPEC made minor revisions to the first quarter based on updated data. Within the OECD, demand growth is expected to be led by the Americas, with Asia Pacific also contributing modestly, while OECD Europe is projected to see a slight contraction of about 13,000 bpd year on year. 

In non-OECD countries, demand is forecast to rise by around 1.2 million bpd, driven by strong performance in Other Asia, followed by China, India, the Middle East, and Latin America. Total world oil demand is expected to average 105 million bpd in 2025, buoyed by resilient air travel and road transport – particularly trucking – as well as robust industrial, construction, and agricultural activity in the developing world. Petrochemical growth and new capacity in countries like China and across the Middle East will further underpin demand. 

Looking to 2026, global oil demand is forecast to grow by another 1.3 million bpd. The OECD’s contribution is expected to be modest, around 0.1 million bpd, with OECD Americas once again in the lead, alongside support from Europe and Asia Pacific. Non-OECD countries will remain the primary engine of growth, with Other Asia, India, and China at the forefront, supported by Middle Eastern and Latin American consumption.