(Bloomberg) -- The International Energy Agency cut its oil demand forecast for this year and estimated even slower growth in 2025 due to a lackluster economic outlook and the rising popularity of electric vehicles. 

The agency’s bearish outlook runs counter to the views of several of the world’s top traders, who at a conference this week said oil consumption is surging. Perceived strength in demand has been one of the key factors helping to push Brent crude back above $90 a barrel, along with heightened geopolitical risks and tighter supplies. 

In its first forecast for 2025, the Paris-based IEA predicted demand growth of 1.1 million barrels a day in 2025. It also trimmed its estimate for this year’s expansion in consumption by 130,000 barrels a day to 1.2 million, citing exceptionally weak deliveries in developed economies in the first quarter.

The agency’s growth estimate is below the 1.9 million barrels a day predicted by world’s largest independent oil trader, Vitol Group, and about 1 million barrels a day less than the increase foreseen by OPEC.

The Organization of Petroleum Exporting Countries forecast “robust” demand growth both this year and next in its monthly report on Thursday. In contrast, the IEA predicted that the OPEC+ alliance will see its buffer of idle production capacity swell to one of the highest levels ever seen in 2025 as rival supplies expand.

“Robust production from non-OPEC+, coupled with a projected slowdown in demand growth, will lower the call on OPEC+,” the IEA said in its monthly report on Friday. “If the bloc were to produce in line with that call, effective spare capacity could top 6 million barrels a day — excluding the Covid-19 period — its largest ever supply buffer.”

Despite the downbeat tone on oil demand, the IEA still forecasts inventory declines for much of this year if OPEC+ keeps its current supply curbs in place. The largest decline in stockpiles would come in the third quarter, coinciding with peak summer demand season in the northern hemisphere, when many traders have also been expecting a price rally. 

Even with the slower pace of growth, the IEA expects global demand to surpass 105 million barrels a day for the first time in the second half of 2025. Much of that increase will come from China and India, which remain the two engines of oil demand growth. In contrast, consumption is expected to decline for a second year in developing economies.

There should be ample new supply to satisfy demand growth next year, the IEA said. 

The US, Canada, Brazil and Guyana will add a combined 1.2 million barrels a day of supply this year and 1 million barrels a day next, nearly enough to meet world demand growth by themselves. The US alone will account for about half of those volumes, even as the pace of its production growth declines from historically high levels.

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