Lower economic growth weakens oil demand outloo

“In 2025, we forecast a balanced development in the crude tanker market followed by a slight weakening in 2026. The product tanker market is expected to weaken during both 2025 and 2026 as deliveries from the large order book increases supply growth,” says Niels Rasmussen, Chief Shipping Analyst at BIMCO.

The unprecedented trade policy uncertainty following President Trump import tariff announcements have weakened the outlook for both the global economy and oil demand.
The International Energy Agency (IEA) now expects that oil demand will increase by 0.7 million barrels per day (mbpd) in 2025. In February, an increase of 1.1 mbpd was forecast. In 2026, demand is expected to grow by 0.8 mbpd.
“Whereas refinery throughput is forecast to grow by 0.4 mbpd in both 2025 and 2026, global oil supply is expected to grow by 1.6 mbpd in 2025 and 1.0 mbpd in 2026 as OPEC+ begins to unwinder production cuts,” says Rasmussen.

Oil supply is consequently expected to outpace demand by close to 1 mbpd during both 2025 and 2026. Therefore, oil prices are expected to be under pressure during both years, and the lower prices may help underpin demand.

The excess supply could further drive an increase in global oil inventories which may further support crude tanker demand.

Though there so far is no clear evidence of more ships transiting the Red Sea and Suez Canal, the ceasefire agreed between the US and the Houthi movement could eventually lead to normal routings.

Should that happen, we expect that crude and product tanker demand will end 1% and 3.5% lower than our forecast respectively.

Following two years of very low recycling activity, we forecast that recycling activity will rebound in 2025 to and double in 2026. Despite this, a significant recycling overhang of older ships will remain, and recycling could therefore end even higher than our forecast.

“The demand side, however, contains the most uncertainties. As cargo volumes have started the year lower than last year, rest-of-year crude and product tanker volumes must grow 2.0% and 1.0% YoY respectively for full year volumes to match our forecast. Continued US trade policy uncertainty could meantime hurt private consumption and industrial production and drive volumes lower than our forecast,” says Rasmussen.

Source:BIMCO