ENB Pub Note: An excellent story from the Crude Truth Subsack, and we recommend following them. https://crudetruth.substack.com/p/iea-revised-historical-oil-demand.

There are some real issues going on in the overall pricing of oil and gas in the global markets. It used to be based upon supply and demand, and I have been questioning the data for years.

What are the motivating factors behind the IEA? Who is paying their bills? Integrity must be restored to reporting from the International, and I am including the United States agencies in this as well.

The International Energy Agency (IEA) recently revised its historical oil demand data, significantly altering the perceived oil storage numbers for the past few years. This revision, highlighted in posts on X and reported in various analyses, effectively “wiped out” what was previously thought to be a substantial stock build in global oil inventories from 2022 to 2024.

Details of the IEA Revision

• Scope of the Revision: The IEA adjusted its historical oil demand estimates upward by 330,000 barrels per day (kb/d). This change spans the years 2022 to 2024, with implications extending into early 2025 forecasts.
• Impact on Stockbuilds:
  • Initially, the IEA had reported a cumulative stockbuild of 220 million barrels of oil in global inventories over 2022, 2023, and 2024.
  • After the revision, this stockbuild was erased. Instead, the IEA now estimates a drawdown of nearly 75 million barrels over the same period—a swing of approximately 295 million barrels.
• Reason for the Revision: The IEA found that historical oil demand was higher than previously estimated. This adjustment eliminated what had been referred to as “missing barrels”—unexplained stockpiles that appeared in earlier data due to underestimated demand.
• Effect on Market Perception:
  • The revision flips the narrative from a perceived oversupply to a surprise deficit over the three-year period.
  • While global oil supply is still expected to outpace demand growth in 2025 (with inventories forecast to rise by 720 kb/d in 2025 and 930 kb/d in 2026, per the IEA’s May 2025 Oil Market Report), the historical deficit may have set a floor under oil prices, as noted in X posts.
  • This adjustment aligns with observed market dynamics, such as Brent crude prices rebounding to around $66/bbl in May 2025 after dropping to a four-year low of $60/bbl earlier in the year, influenced by trade tensions and OPEC+ production decisions.

Context Over the Last 5 Years (2020–2024)

To understand the broader context of oil storage trends over the last five years, we can look at the IEA’s pre-revision and post-revision perspectives, alongside other data:

• 2020: The COVID-19 pandemic caused a historic collapse in oil demand, dropping by nearly 9 million barrels per day (mb/d) compared to 2019, leading to a massive inventory surplus. The IEA’s Oil 2021 report notes that global oil stocks (excluding strategic reserves) ballooned during this period.
• 2021: Demand rebounded by about 5 mb/d from 2020 lows, and global oil stocks began to normalize, returning to pre-pandemic levels by the end of 2021, as per the IEA’s Oil 2021 report. Stocks were drawn down significantly as supply struggled to keep pace.
• 2022–2024 (Pre-Revision):
  • The IEA initially reported stockbuilds totaling 220 million barrels over these three years, suggesting a period of oversupply.
  • For example, the IEA’s Oil Market Report from 2019 (with data extending into early 2022) noted that OECD oil stocks fell by 21.7 million barrels in February 2019 but were still 16 million barrels above the five-year average. By 2022, this trend of stockbuilding appeared to continue due to weaker-than-expected demand growth in OECD countries and supply increases from non-OPEC producers.
• 2022–2024 (Post-Revision):
  • The revised data now shows a drawdown of 75 million barrels, indicating that demand was stronger than previously thought, particularly in emerging economies like China and India.
  • This aligns with the IEA’s April 2025 Oil Market Report, which notes robust demand growth in Q1 2025 (up 1.2 mb/d year-on-year) but also a downward revision of 2025 demand growth by 300 kb/d to 730 kb/d due to trade tensions.
• 2024 Specifically: The IEA’s May 2025 Oil Market Report indicates that global oil inventories declined by 140 kb/d in 2024, a trend reversed by the expected stockbuilds in 2025 and 2026.

Implications and Critical Analysis

• Market Impact: The revision suggests that the oil market was tighter than previously thought during 2022–2024, potentially explaining why oil prices didn’t collapse despite perceived oversupply. However, the current oversupply outlook for 2025–2026 (due to OPEC+ increasing output by 411 kb/d in May and June 2025) may still pressure prices downward, as Brent crude futures fell to $60/bbl in early May 2025 before recovering slightly.
• Data Reliability Concerns: The IEA’s significant revision raises questions about the accuracy of real-time oil demand data. Underestimating demand by 330 kb/d over three years suggests potential flaws in data collection, particularly in non-OECD countries where data reporting can be less transparent. This could lead to market mispricing and policy missteps.
• Geopolitical and Economic Context: The revision occurs amid heightened trade tensions (e.g., U.S.-China trade deals in May 2025) and OPEC+ decisions to increase production, which may have masked the tighter market conditions. Additionally, sanctions on Iran and Venezuela, along with supply constraints in other regions, likely contributed to the historical deficit.
• Skepticism of the Narrative: While the IEA’s revision aligns with some market observations (e.g., price resilience), it’s worth questioning whether this adjustment is a convenient way to reconcile past data discrepancies without addressing underlying methodological issues. The IEA’s focus on OECD stock data might also overlook significant non-OECD stock changes, which are harder to track but critical to global balances.

Summary of the IEA revision.

The IEA’s revision erased a perceived stock build of 220 million barrels from 2022 to 2024, replacing it with a drawdown of 75 million barrels, due to an upward adjustment of historical oil demand by 330 kb/d. Over the last five years, oil storage trends saw a massive buildup in 2020 due to the pandemic, a drawdown in 2021 as demand recovered, and now a revised deficit from 2022 to 2024, with inventories expected to rise again in 2025–2026. This adjustment highlights a tighter historical market but raises concerns about data accuracy and the IEA’s ability to capture real-time demand dynamics, especially in emerging economies. The revision may have supported oil prices in the short term, but ongoing oversupply risks and economic uncertainties continue to shape the market outlook.

Critical Analysis of Assumptions and Biases

• IEA’s Perspective:

  • Strengths: The IEA’s forecasts incorporate detailed modeling of EV adoption, renewable energy growth, and policy impacts (e.g., U.S. tariffs, EU climate goals). Its focus on climate action aligns with global trends in OECD countries, where policy support for decarbonization is stronger.
  • Weaknesses: The IEA may underestimate demand resilience in non-OECD countries, where economic growth and limited access to renewables could sustain oil use longer. Its peak demand prediction relies heavily on optimistic assumptions about EV penetration and policy enforcement, which may falter if economic or political priorities shift (e.g., pushback against net-zero policies noted by OPEC).
  • Bias: The IEA’s alignment with climate goals (e.g., supporting COP28 outcomes) may lead to a normative bias, where forecasts reflect desired outcomes (lower oil use) rather than purely data-driven projections. This is evident in its controversial 2021 Net Zero report advising against new fossil fuel investments, which OPEC criticized as “misguided.”

• OPEC’s Perspective:

  • Strengths: OPEC’s forecasts are grounded in historical demand trends and the practical realities of energy access in developing economies. Its focus on energy security resonates with countries reliant on oil revenues, and its demand growth estimates for 2024–2026 align better with observed price resilience (e.g., Brent at $66/bbl in May 2025 despite oversupply fears).
  • Weaknesses: OPEC may overestimate long-term demand by downplaying the speed of the energy transition, especially in regions like China, where EV sales are surging. Its dismissal of peak demand ignores structural shifts in global energy systems, such as declining diesel car use in Europe (noted by the IEA).
  • Bias: OPEC’s forecasts reflect its institutional interest in maintaining oil’s relevance, potentially leading to overly optimistic projections. Its call for $14 trillion in oil investment by 2045 could be seen as self-serving, ensuring market stability for its members at the expense of broader climate goals.

Market Implications and Reality Check

• Price Dynamics: Despite the IEA’s lower demand forecasts, oil prices (Brent at $66/bbl in May 2025) have not collapsed as expected under an oversupply scenario, suggesting OPEC’s higher demand estimates may better reflect market sentiment. However, the IEA’s revision of historical demand (erasing a 220 million barrel stockbuild from 2022–2024) indicates past demand was stronger than thought, supporting price floors.
• China’s Role: Both agencies highlight China, but actual import data (down 2.1% in 2024 to 11.04 mb/d) contradicts their demand growth forecasts (OPEC: +320 kb/d, IEA: +151 kb/d in 2024). This gap suggests both may be overestimating effective demand, possibly due to unreported inventory builds or slower economic activity.
• Supply Dynamics: The IEA projects a supply overhang of 720 kb/d in 2025 and 930 kb/d in 2026, driven by OPEC+ production increases (e.g., 411 kb/d in May–June 2025) and non-OPEC+ growth (1.3 mb/d in 2025). OPEC’s focus on maintaining cuts (delayed unwinding until at least March 2025) aims to counter this, but overproduction by members like Kazakhstan undermines its efforts.
• Skepticism of Narratives: The IEA’s peak demand forecast may be overly prescriptive, reflecting a Western-centric view that underplays the energy needs of developing nations. Conversely, OPEC’s rejection of a peak could be a strategic denial to justify continued production, ignoring technological and policy shifts. The truth likely lies between these extremes, with demand growth slowing but not peaking as soon as the IEA predicts, nor growing indefinitely as OPEC suggests.

Conclusion

As of May 2025, the IEA forecasts slower oil demand growth (740 kb/d in 2025, 760 kb/d in 2026) and a peak by 2030, driven by climate policies and EV adoption, while OPEC projects stronger growth (1.30 mb/d in 2025, 1.28 mb/d in 2026) with no peak until after 2045, emphasizing energy security and non-OECD demand. The 2024 gap of 1.09 mb/d highlights their divergent views, with the IEA focusing on a faster energy transition and OPEC on sustained oil reliance.

Both perspectives carry biases—IEA toward climate goals, OPEC toward market stability—but real-world data, like China’s declining imports, suggests neither fully captures the current market. The actual trajectory will depend on economic recovery, policy enforcement, and technological adoption, likely falling between their projections.

The bottom line is that we will see a stronger alignment to real data usage in pricing in the next year. There are some fundamental changes in the oil and gas markets, and I will cover those in future stories.

The crude truth about oil and gas is that we are going to need them in the foreseeable future. The more we see “Renewable” wind, solar, and hydrogen fail, the more we will see natural gas, nuclear, and oil demand increase.

And the truth will come out.