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Canada’s inflation rate accelerated by more than expected in September, but not enough to deter the Bank of Canada from cutting interest rates next week, according to several analysts.
The Consumer Price Index rose 2.4 per cent in September on an annual basis, up from August’s 1.9-per-cent pace, Statistics Canada said Tuesday. Financial analysts were expecting an inflation rate of 2.2 per cent.
The CPI results were heavily influenced by fluctuations in fuel costs. Year over year, gas prices fell by 4.1 per cent in September, but that was less than a 12.7-per-cent decline in August, putting upward pressure on headline inflation.
Excluding gas, consumer prices have risen by 2.6 per cent over the past year, up from 2.4 per cent in August.
Just after the CPI report, investors were pricing in a 66-per-cent chance that the Bank of Canada will cut interest rates by a quarter-point on Oct. 29, according to Bloomberg data. That’s down from 75-per-cent odds before the report was published.
How today’s inflation report has shifted market and economist predictions for BoC rate cuts
Still, with core measures of inflation remaining in check, several economists on Bay Street said the Bank of Canada was poised to continue cutting rates next week.
“Consumer prices posted surprisingly strong gains in September, but measures of underlying inflation suggest much less cause for concern,” said Royce Mendes, head of macro strategy at Desjardins Securities, in a note to clients.
“While there might be scope for debate about inflation, there should be no disagreement that the economy is weak and in need of support,” he added.
The Bank of Canada resumed cutting rates in September after three consecutive holds, finding that growth and employment concerns outweighed the upside risks to inflation from tariffs. The bank’s benchmark interest rate is now 2.5 per cent.
Bank of Canada finds downbeat businesses and consumers ahead of rate decision
Inflation has picked up in various categories. For example, grocery prices have risen by 4 per cent over the past year, and have been trending higher since April, 2024. Statscan noted that several items – including beef and coffee – have contributed to the upturn.
Still, there are signs that Canada isn’t facing a reignited inflation crisis. The Bank of Canada’s core measures of inflation – which strip out volatile movements in the CPI – rose by an annual average of 3.15 per cent in September, a tad higher than 3.1 per cent in August.
Andrew Grantham, senior economist at CIBC Capital Markets, said in a client note that “core measures of inflation were just subdued enough to support” another quarter-point rate cut, which would bring the policy rate to 2.25 per cent.
Speaking to media last week, Bank of Canada Governor Tiff Macklem said the economic outlook for the rest of the year was tepid.
“It’s going to be growth, but it’s going to be soft growth. It’s not going to feel very good, and it’s certainly not going to be enough to close the output gap,” Mr. Macklem said.
The Canadian economy shrank at an annualized rate of 1.6 per cent in the second quarter as exports to the United States plummeted. The unemployment rate, meanwhile, has risen to 7.1 per cent as companies get cautious on hiring.
Private-sector forecasters expect the economy to eke out growth in the third quarter, but continue to struggle as U.S. tariffs weigh on Canadian exports. The Trump administration has hammered a number of Canadian industries with duties, including steel, aluminum and autos.
The Globe and Mail reported on Tuesday that Canada and the U.S. could sign a trade deal on steel, aluminum and energy later this month, but that automobiles and softwood lumber wouldn’t be part of the agreement.
On Monday, the Bank of Canada published surveys of businesses and consumers that reflected a downbeat mood from both camps. For instance, most companies do not expect to increase the size of their workforce over the next year, according to survey results.
Stephen Brown, deputy chief North America economist at Capital Markets, said he was leaning toward another rate cut next week, despite the upside surprise in the CPI.
“Overall, there’s no clear message from the CPI, although we’re still leaning toward another rate cut this month following Governor Tiff Macklem’s somewhat dovish comments on the growth outlook last week,” he said in a note to clients.
Bank of Canada Governor Tiff Macklem expects slow economic growth and a soft labour market through the back half of the year as U.S. tariffs and uncertainty over the future of continental trade weigh on business investment and hiring in Canada.
Speaking to reporters from the annual International Monetary Fund and World Bank meetings in Washington, Mr. Macklem said he expects the Canadian economy to grow at a sluggish pace in the third and fourth quarters, and he cautioned against putting too much weight on September job numbers, which showed a rebound in employment.
“It’s going to be growth, but it’s going to be soft growth. It’s not going to feel very good, and it’s certainly not going to be enough to close the output gap,” Mr. Macklem said, noting that the bank is projecting growth in gross domestic product of around 1 per cent in the second half of the year.
He gave no indication of whether the central bank would cut interest rates again at its meeting on Oct. 29. There are several key pieces of data still to come, he said, including September inflation numbers and the bank’s quarterly business survey, which will be published next week.
The bank lowered its policy rate to 2.5 per cent last month, the first rate cut since March. It resumed monetary policy easing after deciding that downside risks to Canada’s tariff-battered economy outweighed upside risks to inflation.
Financial markets are pricing in a roughly 80-per-cent chance of another quarter-point cut at the bank’s October meeting, according to LSEG data.
Much of the debate around the upcoming rate decision centres on how Mr. Macklem and his team are thinking about Canada’s labour market. After two months of significant job losses, employment rebounded by 60,000 in September, although the unemployment rate remained at an elevated 7.1 per cent.
Mr. Macklem suggested the bank wouldn’t put much weight on a single jobs report, given that monthly numbers can be volatile.
“Big picture, what you’re seeing in the labour market is the heavily tariffed sectors are being severely affected,” Mr. Macklem said, pointing to job losses in steel, aluminum, autos, lumber and the transportation industries that support them.
Beyond those sectors, “you’re not seeing a lot of layoffs, but you’re also not seeing a lot of hiring,” he said.
“So, if you have a job, you probably still have a job, unless you’re in one of those highly affected sectors. But you’re seeing youth unemployment is going up because new entrants into the labour market, it’s taking them longer to find a job.”
The Canadian economy contracted 1.6 per cent in the second quarter, led by a sharp pullback in exports. Mr. Macklem said he doesn’t expect another big decline in exports, “but neither are we expecting a rapid rebound.”
Business investment is likewise expected to remain weak, Mr. Macklem said, as companies remain apprehensive until they have a better sense of the Canada-U.S. trade relationship. Canadian negotiators were back in Washington this week trying to secure relief from President Donald Trump’s sector-specific tariffs, but they have not made any breakthroughs.
Both countries have also launched consultations ahead of the review of the United States-Mexico-Canada Agreement on free trade, which will happen next year.
“Uncertainty about U.S. trade policy has come down a bit since where we were in February, March, April, even July. I think uncertainty, though, is shifting now to what happens to CUSMA,” Mr. Macklem said, referring to the free-trade pact. “Until businesses have clarity on what is the outcome of that review, that is going to hold back business decisions.”
The one bright spot for the Canadian economy has been consumer spending, which remained strong through the second quarter. Mr. Macklem said he expects consumption growth to continue, but at a more moderate pace.
Canada’s central bankers will head into the next rate decision armed with a new economic forecast in the quarterly Monetary Policy Report.
Since January, the Bank of Canada has held off on publishing a central forecast, given the huge level of uncertainty around U.S. trade policy and its implications for Canada. Instead, it has published upside and downside scenarios.
“We will be using a new base-case projection to look forward,” Mr. Macklem said. “Against the background of heightened uncertainty, we will need to be humble about our forecasts, and we will continue to put a lot of emphasis on the risks.”
There’s one other key piece of uncertainty: the federal budget, which will be published on Nov. 4, only a few days after the interest rate decision. The Parliamentary Budget Officer and a number of private sector forecasters expect a big jump in Ottawa’s deficit, given increased spending on defence and infrastructure combined with weak revenue growth.
Mr. Macklem said the bank will need to see the budget before adjusting its forecasts for the Canadian economy. But he said the broad strokes of Prime Minister Mark Carney’s approach to fiscal policy are becoming clear, with plans to shrink the government’s operating budget while spending more on major infrastructure.
“When we look at the budget, we will be looking at both the demand impulse but also the potential to build the economy’s supply capacity … It’s that balance between demand and supply in the economy that we look at closely,” he said.
Monday October 20
China real GDP, retail sales, industrial production and fixed asset investment
(8:30 a.m. ET) Canada’s industrial product and raw materials price indexes for September. Estimates are month-over-month increases of 0.5 per cent for both.
(8:30 a.m. ET) Canadian construction investment for August.
(8:30 a.m. ET) Canada’s household and mortgage creidt for August.
(10:30 a.m. ET) Bank of Canada’s Business Outlook Survey and Survey of Consumer Expectations for Q3 are released.
(10 a.m. ET) U.S. leading indicator for September.
Earnings include: BHP Group Ltd.; PrairieSky Royalty Ltd.; Steel Dynamics Inc.
–
Tuesday October 21
Japan machine tool orders
(8:30 a.m. ET) Canadian CPI for September. The Street is projecting a decline of 0.1 per cent from August and a rise of 2.3 per cent year-over-year.
Earnings include: Capital One Financial Corp.; Coca-Cola Co.; GE Aerospace; General Motors Co.; Halliburton Co.; Lockheed Martin Corp.; Netflix Inc.; Philip Morris International Inc.; Texas Instruments Inc.; Waste Connections Inc.; 3M Co.
–
Wednesday October 22
Japan trade balance
U.K. CPI
Earnings include: AT&T Inc.; Hilton Worldwide Holdings Inc.; International Business Machines Corp.; Lam Research Corp.; NextEra Energy Inc.; Storage Vault Canada Inc.; Teck Resources Ltd.; Tesla Inc.; West Fraser Timber Co. Ltd.; Whitecap Resources Inc.; Winpak Ltd.
–
Thursday October 23
Euro zone consumer confidence
(8:30 a.m. ET) Canadian retail sales for August. Consensus is a month-over-month rise of 1.0 per cent.
(8:30 a.m. ET) Canada’s manufacturing sales for September.
(8:30 a.m. ET) U.S. initial jobless claims for week of Oct. 18.
(10 a.m. ET) U.S. existing home sales for September.
Earnings include: Advantage Oil & Gas Ltd.; Amazon.com Inc.; Blackstone Inc.; Canfor Corp.; FirstService Corp.; Ford Motor Co.; Honeywell International Inc.; Intel Corp.; Newmont Gold Corp.; Rogers Communications Inc.; T-Mobile US Inc.; Union Pacific Corp.
–
Friday October 24
Japan CPI and PMI
Euro zone PMI
(8:30 a.m. ET) Canada’s new housing price index for September. The estimate is a month-over-month decline of 0.2 per cent and a drop of 1.9 per cent year-over-year.
(8:30 a.m. ET) U.S. CPI for September. Consensus is a rise of 0.4 per cent month-over-month and up 3.1 per cent year-over-year.
(9:45 a.m. ET) U.S. S&P Global PMIs for October.
(10 a.m. ET) U.S. new home sales for September.
(10 a.m. ET) U.S. University of Michigan Consumer Sentiment for October.
Earnings include: General Dynamics Corp.; Procter & Gamble Co.
This year’s Buy Canadian mantra is resonating well beyond the 49th parallel: Americans, too, are snapping up Aritzia Inc.’s ATZ-T -0.75%decrease popular items including the Super Puff jackets and Sweatfleece hoodies in U.S. stores as the Vancouver-based retailer’s expansion gains traction.
The success beyond Aritzia’s home base is stoking hopes for further gains in the United States and perhaps elsewhere – making the company stand out as an intriguing growth opportunity even as the share price rallies to fresh highs.
That’s right, the stock is no bargain. It is up nearly 64 per cent so far this year and holding onto a premium valuation for a retailer.
It trades at nearly 29-times estimated earnings from analysts over the next 12 months, compared with a forward price-to-earnings of about 14 for Lululemon Athletica Inc. LULU-Q +0.52%increase, according to data from S&P Global Market Intelligence.
For what it’s worth, that’s also more than Google-parent Alphabet Inc., which trades at less than 25-times estimated earnings.
Aritzia’s steep valuation might give some investors pause. But the company’s strong financial results in its most recent fiscal quarter, released last week, points to the sort of growth that makes the P/E ratio look far more acceptable – perhaps even reasonable.
Consider that net income increased by a dazzling 263 per cent over the same period last year, and handily exceeded analysts’ estimates.
While analysts had been expecting the retailer to report a profit of 39 cents a share after adjustments, Aritzia delivered 59 cents a share.
Revenue rose by 32 per cent over the same period. And comparable sales, or online sales and at stores open for at least one year, gained 21.6 per cent – which is nearly double the pace of growth that analysts had been expecting.
The results highlight Aritzia’s ability to navigate U.S. tariffs and the recent end to exemptions on imported packages valued under US$800.
The company accomplished this by expanding its distribution centre in Ohio to handle U.S. orders and accepting margins that are lower than they would have been with open borders.
More importantly, though, the retailer’s quarterly numbers underscored the long-term bullish case for sticking with the stock: Aritzia has established the sort of brand awareness among young and working-aged women that can drive lots more expansion.
“We see still a ton of runway in the U.S.,” Jennifer Wong, Aritzia’s chief executive officer, said during a conference call with analysts last week.
There are now 68 Aritzia boutiques in the United States. The company is reopening its flagship store in Manhattan, and is on track to open six additional stores over the next couple of months in Denver, Miami, Minneapolis, Pittsburgh and Scottsdale.
You can understand why there is so much interest in the United States. U.S. stores and e-commerce activity generated 60 per cent of sales in the most recent quarter. U.S. sales in the fiscal second quarter increased by 41 per cent over the same period last year, compared with 34 per cent growth in Canadian sales.
Over the long term, the U.S. footprint could expand to something closer to 200 locations, on top of a rising e-commerce channel. That is a big increase for what is essentially a mid-sized company worth about $10-billion, based on the combined value of its outstanding shares.
Stores are getting bigger, too. A decade ago, a typical store was about 6,000 square feet. Today, the average is about 10,000 square feet.
“The great news is that we have a pipeline of stores that are identified, and we see that this as something that we can really capitalize on over the next few years,” Ms. Wong said.
There is even the hint of international expansion to keep investors glued to further growth prospects.
Aritzia relaunched a new and improved international e-commerce platform in late August to handle sales outside farther afield.
Prior to the relaunch, these sales generated just 1 per cent of the company’s e-commerce revenue.
But that was without any dedicated marketing effort, which will begin next month. Ms. Wong expects to triple international sales within about two years, which could put new markets within the company’s sights.
“It’s still obviously early days, but it’s very encouraging because we continue to gather more data about how we could perform beyond the borders of Canada and the U.S.,” Ms. Wong said on the conference call.
Aritzia is an expensive stock. But the brand is popular with women and the company is making big gains in a difficult economy – so it may just stay that way.
Gold prices breached $4,200 per ounce for the first time on Wednesday, extending a record rally as rising interest rate cut bets and geopolitical jitters send investors flocking to the safe-haven metal.
Spot gold rose 1.4% to $4,198.23 per ounce after hitting an all-time high of $4,217.95 earlier. U.S. gold futures for December delivery gained 1.4% to $4,220.8.
“The metal has been on a tear, and it doesn’t look like it wants to stop… With U.S.-China trade tensions being reignited in the last few days, investors have even more reason to hedge their long equity bets by diversifying into gold,” said Fawad Razaqzada, market analyst at City Index and FOREX.com.
Gold has surged nearly 58% this year, driven by a confluence of factors including geopolitical tensions, rate-cut bets, central bank buying, de-dollarization and strong ETF inflows.
“With the $5,000 handle now just $800 away, I wouldn’t bet against gold getting there eventually,” Razaqzada said, adding that a short-term correction is likely to shake out weaker hands and attract fresh dip buyers.
The dollar slipped against a basket of peers after Federal Reserve Chair Jerome Powell struck a dovish tone on Tuesday, saying the U.S. labor market remained mired in “low-hiring, low-firing doldrums.”
Gold is considered a traditional hedge against uncertainty and inflation, and also thrives in low-rate environments as it is a non-yielding asset.
Traders are pricing in a 25-basis-point rate cut in October with a 98% probability, followed by another cut in December, which is fully priced in at 100%.
Adding to the safe-haven bid, U.S. President Donald Trump said Washington was considering cutting some trade ties with China after both sides imposed tit-for-tat port fees this week.
Markets are also watching the U.S. government shutdown, which has halted official data and may cloud policymakers’ outlook abroad.
Silver climbed 2.6% to $52.77, following Tuesday’s record high of $53.6.
Silver’s surge is driven by a tight London supply, marked by extreme backwardation and record lease rates, but it could reverse quickly if shortages ease, Michael Brown, senior strategist at Pepperstone, said.
Elsewhere, platinum climbed 1.4% to $1,661.04 and palladium rose 0.7% to $1,545.91.
https://www.cnbc.com/2025/10/15/bank-of-america-bac-earnings-q3-2025.html
Canadian stocks surged on Tuesday, rebounding from Friday’s losses, as gold scales a new peak and in the process lifted many of the mining stocks in Canada’s materials sector, while markets assimilated the renewed China-U.S. trade tensions.
Of note, the Canadian markets were closed yesterday on account of Thanksgiving Day.
After opening just above the previous week’s close, the benchmark S&P/TSX Composite Index gained momentum from the start of the session and traded firmly positive to finally settle at 30,353.61, up by 502.72 points (or 1.68%).
Nine of the 11 sectors posted gains today with Materials sector leading the pack.
Gold and silver, both of which have been up for three consecutive sessions, posted record highs today.
Comex Gold for October delivery climbed to $4,138.70 per troy ounce and Comex Silver for October delivery rose to $50.314 per troy ounce.
The increase in precious metals’ prices lifted Canadian mining stocks, which in turn pushed the market higher.
Meanwhile, the trade relations between China and the U.S. took a turn last week.
After learning about the measures by China to curb rare earth minerals exports, U.S. President Donald Trump threatened to impose another 100% tariff on Chinese goods on top of the existing levies. The new duties are set to take effect from November 1.
Trump also expressed disinterest in meeting Chinese President Xi Jinping in an upcoming summit in South Korea.
Both sides have now tightened their grip on each other’s shipping vessels by imposing special port charges.
Trade tensions between the U.S. and China, the world’s leading major economies and largest consumers, initially overflowed to other markets.
Yesterday, U.S. Treasury Secretary Scott Bessent stated that Trump remains on track to meet the Chinese premier at the Asia-Pacific Economic Cooperation forum, hosted by South Korea in late October. This news halted the sell-off.
Last week, Canadian Prime Minister Mark Carney met U.S. President Donald Trump in Washington, D.C. Despite high expectations, no announcement on tariff reductions or abolition came after the meeting.
The re-negotiation of the Free-Trade Agreement between Canada, the United States, and Mexico is also lying in waiting.
Markets are placing their bets on the ongoing high-level negotiations as both sides stand to benefit from a smoother bilateral trade.
In the U.S., the government shutdown has entered day number fourteen.
Yesterday, Scott Bessent acknowledged that the shutdown is starting to affect the real U.S. economy and people’s lives.
Markets anticipate a 25-basis-point rate cut by the U.S. Federal Reserve later this month.
In Canada, the Bank of Canada cut its benchmark interest rate by 25 basis points to 2.5% in September as largely expected by markets.
On Friday, data released by Statistics Canada revealed that Canada’s unemployment rate held steady at 7.1% in September, below market expectations of 7.2%. It also showed that Canada’s employment rose by 60,400, a 0.3% increase in September following a 65,500 decline in the prior month, and well above market estimates of a 5,000 increase.
These figures dampened the expectations of a rate cut by the Canadian central bank.
In the budget to be tabled on November 4, Carney is planning to implement a slew of measures that will lower costs and protect essential programs that empower Canadians.
Major sectors that gained in today’s trading were Materials (3.19%), Healthcare (2.07%), Consumer Discretionary (2.06%), IT (1.96%) and Financials (1.84%).
Among the individual stocks, Orla Mining Ltd (19.58%), Endeavour Silver Corp (13.99%), Ero Copper Corp (10.60%), Iamgold Corp (7.66%), Bitfarms Ltd (40.96%), and Curaleaf Holdings Inc (5.67%) were the prominent gainers.
Energy (0.28%) and Communication Services (0.57%) were the only two sectors that lost in today’s trading.
Among the individual stocks, Kelt Exploration Ltd (2.01%), Arc Resources Ltd (1.50%), Canadian Natural Resources Ltd (1.21%), BCE Inc (2.12%), and Telus Corp (0.42%) were the notable losers.
Stellantis NV STLA-N +1.72%increase says it is moving production of the Jeep Compass to Illinois from Brampton, Ont., part of a US$13-billion plan to boost production in the United States.
The Brampton plant has been idle since 2023, and work on retooling for new vehicles halted in February, after U.S. President Donald Trump announced plans to lay 25-per-cent tariffs on imported automobiles.
The factory northwest of Toronto had been slated to produce the Jeep Compass when it reopened, but more than 3,000 unionized Stellantis employees remain on layoff while the plant’s future remains unclear.
Stellantis on Tuesday said it plans to boost U.S. production in the U.S. by 50 per cent over the next four years, producing five additional models and adding more than 5,000 jobs in Illinois, Ohio, Michigan and Indiana.
“As part of this announcement, we will move one model from Canada to the U.S.,” Stellantis said in response to questions from The Globe and Mail. “We have plans for Brampton and will share them upon further discussions with the Canadian government.”
Prime Minister Mark Carney said in a statement Stellantis’s decision is a “direct consequence” of U.S. tariffs and possible future trade actions. “Until a more certain trade environment for the North American Auto sector is established through the upcoming review of the Canada-United States-Mexico Agreement, decisions on new investments in the auto sector will continue to be affected.”
The head of Unifor, which represents Stellantis workers, called on the federal government to fight for the jobs.
“Canadian auto jobs are being sacrificed on the Trump altar,” Lana Payne said. “Stellantis cannot be allowed to renege on its commitments to Canadian workers, and governments cannot stand by while our jobs are shifted to the United States. Saving Brampton Assembly must now be this country’s top priority, sending a strong message to any corporation thinking they can take the same egregious actions.”
Brampton Mayor Patrick Brown said he was “deeply disappointed” with Stellantis’s move, which he called a “step backward” from the commitment the company made to workers and their families.
Ontario Premier Doug Ford said Stellantis has received no provincial funding for its Brampton plant and none will be provided until the company provides details on when the factory will restart.
“Stellantis has a duty to live up to their promise to Brampton autoworkers and continue with their allocation in Brampton,” Mr. Ford said.
In 2023, Stellantis’s chief operating officer at the time said the company was committed to the plant and assured the press and employees it would reopen with new models after the retooling. “I’ve given a reassurance in writing to the province, to the feds as well, that we absolutely are committed on the agreements we have with … Brampton,” Mark Stewart said.
In a statement on Tuesday, Stellantis provided no details on its plans for the plant. “We have been in Canada for over 100 years, and we are investing. We are adding a third shift to the Windsor Assembly Plant to support increased demand of all versions of the Chrysler Pacifica and the new Sixpack-powered Dodge Charger Scat Pack and R/T models. Canada is very important to us.”
Stellantis said its new U.S. investments include:
-US$600-million to reopen the plant in Belvidere, Ill., with production of the Jeep Compass and Cherokee by 2027, adding 3,300 jobs.
-US$400-million to move production of a truck previously planned for Belvidere to Toledo, Oh., by 2028.
-$100-milion to retool the Jeep plant in Warren, Mich., to add an electric vehicle and gas-powered SUV.
Mr. Trump says the import taxes on cars and other goods are intended to foster domestic manufacturing.
“We want to make our own cars,” Mr. Trump said in May. “We don’t really want cars from Canada. And we put tariffs on cars from Canada and at a certain point, it won’t make economic sense for Canada to build those cars.”
His trade policies upend decades of free trade in the auto sector that relies on an invisible border for efficient, just-in-time production. A car part typically crosses the border six or seven times before final assembly.
Auto parts are not subject to tariffs if they are compliant with the North American free trade agreement. But aluminum and steel face tariffs of 50 per cent, driving up costs for suppliers.
Ontario is also home to plants owned by Ford, General Motors, Honda and Toyota. Ford’s Oakville plants is idle but work is progressing on a retooling to make heavy-duty pickup trucks, the company has said.
Since Mr. Trump’s import taxes were put in place, there have been thousands of layoffs in Ontario’s auto sector, which mainly produces cars for the U.S market. Some companies have delayed new products and cancelled shifts.
Toyota has called the tariffs on its Ontario exports to the U.S. “unsustainable in the long term.”
World oil supply will rise more rapidly than previously expected this year and a surplus could expand in 2026 as OPEC+ members and other producers lift output and demand remains sluggish, the International Energy Agency predicted on Tuesday.
Supply will rise by 3.0 million barrels per day in 2025, up from 2.7 million bpd previously forecast, the IEA, which advises industrialized countries, said in a monthly report. Next year it will rise by a further 2.4 million bpd, it said.
OPEC+ is adding more crude to the market after the Organization of the Petroleum Exporting Countries, Russia and other allies decided to unwind some output cuts more rapidly than earlier scheduled. The extra supply has raised concern of a surplus and weighed on oil prices this year.
Trump’s threat to impose higher tariffs on China pushes oil to five-month low
South Bow explores increasing crude exports after Carney raises Keystone XL revival with Trump
In the IEA’s view, supply is rising far faster than demand. The agency on Tuesday trimmed its forecast for world demand growth this year to 710,000 bpd, down 30,000 bpd from the previous forecast, citing a more challenging economic backdrop.
“Oil use will remain subdued over the remainder of 2025 and in 2026, resulting in annual gains forecast at around 700,000 barrels per day in both years,” the IEA said in a monthly report.
“This is well below historical trend, as a harsher macro climate and transport electrification make for a sharp deceleration in oil consumption growth.”
IEA demand forecasts are at the lower end of the industry range, as the agency expects a faster transition to renewable energy sources than some other forecasters such as OPEC.
On Monday OPEC maintained its forecast that demand will rise by 1.3 million bpd this year, almost double the rate expected by the IEA, and said the world economy was doing well.
Oil prices declined on Tuesday, with Brent crude trading just below $62 a barrel. That was still up from a 2025 low of near $58 in April.
The IEA has been saying the world market looks oversupplied. Tuesday’s report said global oil supply in September was up by 5.6 million bpd from a year ago, with OPEC+ accounting for 3.1 million bpd of the increase.
Next year, the report implied that global supply may exceed demand by about 4 million bpd, due to growth from OPEC+ and producers outside the group such as the U.S., Canada, Brazil and Guyana, and a limited expansion in demand. That compares to about 3.3 million bpd last month.
The IEA’s view on the potential surplus is larger than that of others. A Reuters poll of analysts in September suggested the market could face an oversupply of 1.6 million bpd in 2026.
OPEC, in contrast, expects world oil supply to closely match demand next year, because it sees a much slower rate of expansion from outside OPEC+ as well as stronger demand.