Israel-Iran Conflict: Oil Supply Security At Risk, Says IEA's Fatih Birol

The International Energy Agency has raised concerns about the future of oil markets, highlighting new uncertainties amid rising geopolitical tensions. Its latest report, Oil 2025, outlines significant shifts in the drivers of supply and demand growth, with the Israel-Iran conflict bringing immediate energy security risks into sharp focus. It also stated that, oil markets are undergoing structural changes with intensifying geopolitical strains.

"Based on the fundamentals, oil markets look set to be well-supplied in the years ahead—but recent events sharply highlight the significant geopolitical risks to oil supply security. When it comes to energy security, there is no room for complacency. The IEA remains deeply committed to working with energy producers and consumers to safeguard energy security," IEA Executive Director Fatih Birol said.

The IEA's medium-term outlook indicates that global oil supply is set to far outpace demand growth in the coming years. This structural change is driven by intensifying geopolitical strains and shifting economic dynamics. The key drivers of supply and demand growth over the past 15 years are beginning to fade, the report stated.

China, which has been a major driver of global oil demand for over a decade, is expected to see its consumption peak in 2027. This is attributed to a surge in electric vehicle sales and the continued deployment of high-speed rail and natural gas-powered trucks.

Meanwhile, US oil supply is projected to grow at a slower pace as companies scale back spending and focus on capital discipline. Despite this, the United States remains the largest contributor to non-OPEC supply growth in the coming years.

Global oil demand is forecasted to increase by 2.5 million barrels per day (mb/d) between 2024 and 2030, reaching a plateau of around 105.5 mb/d by the end of the decade. In contrast, global oil production capacity is expected to rise by over 5 mb/d to 114.7 mb/d by 2030. This growth will be driven by robust gains in natural gas liquids and other non-crude liquids, reflecting strong global demand for petrochemical feedstocks and the development of liquid-rich gas resources.