RIYADH: The International Energy Agency has downgraded its outlook for global oil demand growth in 2025, warning that a weakening global economy and rising trade tensions are weighing heavily on consumption.

In its monthly oil market report released  on Tuesday, the Paris-based agency revised its demand growth forecast down by 300,000 barrels per day, to 730,000 bpd for 2025. The IEA expects the slowdown to continue into 2026, when demand is projected to rise by just 690,000 bpd—one of the slowest rates in recent years.

The downgrade comes despite a strong first quarter, in which global oil consumption rose by 1.2 million bpd—its fastest pace since 2023.

However, that momentum is expected to fade amid a more fragile economic backdrop, particularly in advanced economies, where industrial activity and freight transport remain under pressure.

At the same time, oil prices have fallen sharply in recent weeks, reflecting growing concerns about oversupply and faltering demand.

Brent crude, the international benchmark, has dropped around $10 per barrel since March, falling to $65 and briefly dipping below $60 earlier this month—the lowest level since 2021.

According to the IEA, crude production among nine key OPEC+ countries rose by 60,000 bpd in March, reaching 21.94 million bpd—exceeding the group’s agreed target by 830,000 bpd. Saudi Arabia, which has led efforts to curb supply, edged output up slightly to 9.01 million bpd, just above its target of 8.96 million bpd. The Kingdom retains the largest spare capacity in the group, with the ability to raise output by more than 3 million bpd if required.

Other major producers, including Iraq, the UAE and Kuwait, all produced well above their assigned quotas. Iraq pumped 4.32 million bpd in March, compared to a target of 3.88 million bpd. The UAE exceeded its ceiling by 350,000 bpd, while Kuwait overproduced by 100,000 bpd. Nigeria was the only major member to fall short of its target, producing 1.4 million bpd—just below its 1.5 million bpd quota—amid ongoing operational and security challenges.

In a further sign of a weakening market, global oil inventories rose by 21.9 million barrels in February, climbing to 7.65 billion barrels. Crude and feedstock stocks increased by over 41 million barrels, while refined product inventories fell by 19.2 million barrels, driven by draws in OECD countries.

Refining margins also softened in March, particularly in the Atlantic Basin, where cracks for middle distillates narrowed. In response, the IEA cut its 2025 forecast for global crude throughput by 230,000 bpd, now expecting refiners to process 83.2 million bpd this year. A modest increase to 83.6 million bpd is forecast for 2026.

Despite plans by OPEC+ to increase output targets by 411,000 bpd in May, the IEA warned that any actual increase could be muted by existing overproduction and patchy compliance with quotas. It also trimmed its forecast for non-OPEC+ supply growth in 2025 by 260,000 bpd, now projecting a rise of 1.2 million bpd.

With rising economic risks, volatile geopolitics, and uncertain production policy all in play, the global oil market faces a turbulent road ahead.

RIYADH: Saudi Arabia’s inflation rate accelerated to 2.3 percent in March, driven by higher costs for housing rents, food, and personal goods, official data showed.

The increase was notably influenced by the housing segment’s 25.5 percent weight in the Consumer Price Index.

According to the General Authority for Statistics, the rise was mainly due to a 6.9 percent increase in the housing, water, electricity, gas, and other fuels category. This was largely fueled by an 8.2 percent jump in actual housing rents, with apartment rents surging 11.9 percent.

Food and beverage prices also contributed to the annual uptick, climbing 2 percent, primarily due to a 3.8 percent increase in meat and poultry costs. Meanwhile, the personal goods and services category rose 3.9 percent, driven by a sharp 26.2 percent spike in the prices of jewelry, watches, and precious antiques.

Other contributing factors included the restaurants and hotels segment, which rose 1.3 percent, largely due to a 3.3 percent increase in hotel and furnished apartment service prices. Education costs went up by 1.1 percent, with tertiary education fees rising 4.3 percent.

In contrast, transport prices fell 0.8 percent, driven by a 1.5 percent decline in vehicle purchase costs. The furnishings and household equipment category dropped 2.6 percent, while clothing and footwear prices declined 0.8 percent, impacted by a 1.9 percent drop in ready-made clothing.

On a monthly basis, the CPI increased by 0.3 percent in March compared to February. This was attributed to a 0.5 percent rise in the housing, water, electricity, gas, and other fuels segment, driven by a 0.6 percent increase in housing rents.

The food and beverage group also edged up by 0.3 percent month on month, as vegetable prices rose 2 percent. Other notable monthly increases included personal goods and services at 0.4 percent, restaurants and hotels at 0.5 percent, and recreation and culture at 0.6 percent, as well as education at 0.7 percent, clothing and footwear at 0.3 percent, and communication at 0.1 percent. 

The report also noted a 0.9 percent monthly decline in furnishings and household equipment, while prices in the transport, health, and tobacco categories showed no significant change.

Wholesale price index

In a separate report, GASTAT noted that Saudi Arabia’s Wholesale Price Index increased 1.5 percent year on year in March, driven by a 3.2 percent rise in the prices of other transportable goods and a 3.6 percent increase in agriculture and fishery products.

Food products, beverages, tobacco, and textiles edged up 0.1 percent annually, supported by a 2.1 percent rise in grain mills, starch, and other food items, as well as a 1.2 percent increase in leather and leather product prices, including footwear.

By contrast, prices for metal products, machinery, and equipment fell 0.2 percent, driven by a 3.5 percent drop in general-purpose machinery and a 5.5 percent decline in radio, television, and communication equipment costs.

Ores and minerals recorded a 1.9 percent year-on-year decrease due to falling prices for stone and sand.

On a monthly basis, the WPI rose 0.4 percent in March compared to February, led by a 0.4 percent increase in the prices of metal products, machinery, and equipment.

This was primarily driven by a 2.9 percent rise in fabricated metal products and a 0.6 percent increase in electrical machinery and apparatus.  

The same rate of increase was recorded in other transportable goods, while food-related categories edged up 0.2 percent, driven mainly by a 0.5 percent rise in the prices of grain mills, starch, and other food products, along with a 0.1 percent increase in prices of meat, fish, fruits, vegetables, oils, and fats. 

Agriculture and fishery product prices inched up 0.1 percent, while the ores and minerals segment remained stable with no significant change.