Global oil supply could exceed demand by around 600,000 barrels per day this year, the International Energy Agency said on Thursday, due to growth led by the United States and weaker than expected global demand.

The outlook of ample supplies despite U.S. sanctions on major exporters Russia and Iran highlights the challenge for OPEC+, or the Organization of the Petroleum Exporting Countries plus Russia and other allies, in balancing the market.

"The United States is currently producing at record highs and is forecast to be the largest source of supply growth in 2025," the IEA, which advises industrialised countries, said in a monthly report.

"The latest round of sanctions on Russia and Iran has yet to significantly disrupt loadings, even as some buyers have scaled back purchases."

Last month, the IEA had suggested a slightly narrower surplus of around 500,000 bpd, according to Reuters calculations based on the agency's data.

World oil demand is now expected to rise by 1.03 million bpd in 2025, the IEA said on Thursday, down 70,000 bpd from last month's forecast, with growth driven largely by Asia and specifically China.

"Asian countries will account for almost 60% of gains, led by China where petrochemical feedstocks will provide the entirety of growth as demand for refined fuels reaches a plateau."

Growing consumption of petrochemical feedstocks, the IEA added, accounts for almost all demand growth gains since the COVID-19 pandemic.

Oil ticked lower after the report's publication. Brent oil futures traded at $70.85 at 0926 GMT, compared with $71.01 at 0900 when the report was published.

SURPLUS COULD BE LARGER

The report highlights the headwinds OPEC+ faces this year as growing global trade tensions could impact demand against a backdrop of robust supply growth.

OPEC+ decided earlier this month to start unwinding its most recent layer of output cuts from April. The 2025 surplus could grow by a further 400,000 bpd if OPEC+ extends its unwinding of cuts and fails to rein in overproduction, the IEA said.

"The macroeconomic conditions that underpin our oil demand projections deteriorated over the past month as trade tensions escalated between the U.S. and several other countries," the IEA said, prompting it to revise down its demand growth estimates for the fourth quarter of 2024 and the first quarter of 2025.

In its own report on Wednesday, OPEC kept its view for 2025 oil demand growth unchanged at 1.45 million bpd, and flagged a 363,000 bpd rise in OPEC+ output in February led by Kazakhstan.

The IEA sees 2025 global supply growth doubling relative to the 2024 pace of growth, to around 1.5 million bpd, assuming OPEC+ does not unwind its cuts further beyond April.