The global oil market may be tighter than headline supply-demand figures suggest, the International Energy Agency (IEA) said Friday, citing rising refinery activity and seasonal summer demand as key drivers of short-term market pressure.

In its latest monthly report, the IEA raised its 2024 global supply growth forecast to 2.1 million barrels per day (bpd), up 300,000 bpd from earlier estimates. However, demand is expected to rise by only 700,000 bpd — the slowest pace since 2009, excluding the pandemic-hit 2020 — implying a significant surplus on paper.

Yet the agency warned that rising refinery processing, especially to meet travel and power needs during the Northern Hemisphere summer, is absorbing much of the additional supply.

“Prompt time spreads are in steep backwardation and refinery margins remain healthy despite implied stock builds,” the report noted.

The IEA said the OPEC+ decision to accelerate the unwinding of production cuts had little impact on markets, with oil prices rising nearly 2% after the announcement, suggesting tight underlying fundamentals. Brent crude was trading near $69 a barrel on Friday.

Demand is also being bolstered by increased crude burning for power generation, expected to double to 900,000 bpd between May and August. Refinery throughput is forecast to rise 3.7 million bpd in the same period.

The IEA added that while it's too early to assess the impact of new U.S. tariffs on global oil demand, early signs of weakening consumption have emerged in countries most exposed to trade tensions, such as China, Japan, South Korea, Mexico, and the United States.

Looking ahead to 2025, the agency projects demand growth of 720,000 bpd — slightly lower than previous estimates — against supply growth of 1.3 million bpd, continuing the trend of market surplus.

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