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(Bloomberg) — Global oil demand is under pressure from the escalating trade war at the same time that OPEC+ is reviving output, threatening to deepen a supply surplus, the International Energy Agency said.

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A slower pace of oil deliveries in recent months prompted the IEA to trim forecasts for this year’s consumption growth, according to its latest monthly report. World markets face a surplus of 600,000 barrels a day in 2025, and last week’s surprise announcement by OPEC+ could add another 400,000 barrels a day, it said.

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“The macroeconomic conditions that underpin our oil demand projections deteriorated over the past month as trade tensions escalated between the United States and several other countries,” the Paris-based agency said. The flurry of tariffs has “tilted macro risks to the downside.”

Oil is trading near $71 a barrel in London after sinking to the lowest since 2021 last week, following OPEC+’s decision to gradually restart halted production from April, and President Donald Trump’s on-off announcements of punishing tariffs on China, Europe, Canada and Mexico. 

READ: Top Oil Traders Turn Bearish on Prices, Seeing Oversupply

The Organization of Petroleum Exporting Countries, led by Saudi Arabia and Russia, surprised oil traders on March 3 when it agreed that long-delayed plans to gradually increase production would go ahead next month. Trump had called on the cartel to lower fuel prices. 

The IEA, which advises major economies, reduced projections for growth in world oil consumption this year by roughly 100,000 barrels a day to about 1 million a day. Global demand will average 103.9 million barrels a day in 2025, and Asia will account for almost 60% of this year’s growth, it projects.

The expansion in demand will be eclipsed by another 1.5 million barrel-a-day surge in oil supplies, led by the US, Brazil, Canada and Guyana. As a result, world markets are headed for a surplus even if OPEC+ exercises its option to cancel the rest of its scheduled production increases, the IEA said. 

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