Global Oil Supply Surplus to Widen Through 2026, IEA Reports

The International Energy Agency (IEA) has projected in its latest monthly report that global oil supply will continue to outpace demand for the remainder of this year and through 2025, with a significant surplus potentially reaching 4.09 million barrels per day by 2026.

In what Reuters describes as the IEA's latest warning on global oil market oversupply, the forecasted surplus of 4.09 million barrels per day represents approximately 4% of global demand. This figure substantially exceeds surplus estimates from other institutions.

The report indicates that as global oil supply expands amidst subdued demand growth, 'the oil market is showing further signs of imbalance.' This follows coordinated output increases since April by the Organisation of the Petroleum Exporting Countries (OPEC) and allied non-OPEC producers, including Russia. Concurrently, nations such as the United States and Brazil have also raised production.

Specific IEA forecasts detail global oil supply growth of approximately 3.1 million barrels per day in 2025, followed by 2.5 million barrels per day in 2026. In contrast, demand growth for next year is projected at 770,000 barrels per day - a figure revised upwards by 70,000 barrels per day from last month's forecast, attributed primarily to rising demand from chemical plants.

Notably, the IEA's annual World Energy Outlook report, released on the 12th, suggests that current growth trends in global oil and natural gas demand could persist until 2050.

Current IEA data reveals that global oil production in October had increased by 6.2 million barrels per day compared to the start of the year, with rises from both OPEC and non-OPEC nations. Saudi Arabia, OPEC's largest producer, contributed an additional 1.5 million barrels per day. Among non-OPEC producers, Russia's contribution was limited to 120,000 barrels per day, a situation influenced by Western sanctions and attacks on its energy infrastructure. The report notes that, despite US sanctions against major Russian exporters Rosneft and Lukoil scheduled to take effect on 21 November, Russia's oil exports have not yet been significantly impacted.

The report further highlights a substantial surge in global oil inventories, which reached nearly 8 billion barrels by September - the highest level since July 2021. This build-up is attributed mainly to a sharp increase in oil held in maritime transport storage, a trend expected to continue.

This IEA assessment contrasts with a monthly oil market report also released on the 12th by OPEC. According to Reuters calculations based on that report, OPEC forecasts a daily oil surplus of just 20,000 barrels by 2026 - a figure considerably lower than the IEA's projection of 4.09 million barrels per day.