EA Raises 2026 Oil Surplus Forecast to 4.09M Bpd


   
Karim Bastati
DTN Analyst

   VIENNA (DTN) -- The International Energy Agency in its latest monthly oil 
report published Thursday (11/13) once again raised its oil surplus forecast 
for next year on the back of soaring global production. The Paris-based energy 
watchdog now expects global oil supply to outpace demand next year by 4.09 
million bpd, up from 3.97 million bpd in last month's report.

   The expectation of an even larger oil glut came despite upward revisions to 
demand growth forecasts for both this year and next. Improving macroeconomic 
conditions amid easing trade tensions led to a rebound in global demand growth, 
spearheaded by deliveries to China.

   Demand growth, according to IEA, averaged 920,000 bpd year-on-year in the 
third quarter, more than double the yearly growth rate of 430,000 bpd estimated 
for the second quarter. This led the agency to raise its demand growth 
forecasts to 790,000 bpd in 2025 and 770,000 bpd in 2026, up from 710,000 bpd 
and 700,000 bpd, respectively.

   The upward revision to global production estimates, however, dwarfed the 
bump in demand growth forecasts, leading to an even steeper oversupply 
forecast. The IEA expects global supply to grow by 2.5 million bpd next year, 
with countries outside the Organization of Petroleum Exporting Countries making 
up for nearly half of the increase.

   Despite production falling by 440,000 bpd in October amid field maintenance 
and outages, global oil output is still on track to grow by 3.1 million bpd 
year-on-year in 2025, according to the report. With OPEC's rapid unwinding of 
production cuts since April and record high U.S. production, global production 
last month was still 6.2 million bpd higher than in January.

   This supply-demand imbalance led to global inventories expanding for the 
ninth consecutive month in October, with preliminary data showing volumes on 
water swelling further. In September, globally-observed oil inventories surged 
by 77.7 million bbl to the highest level since June 2021, as ramped-up exports 
from the Middle East led to an 80 million-bbl increase in oil on water.

   While market fundamentals are unmistakably pointing to a growing global oil 
glut, IEA's report did flag supply-side risks which could soften the blow to 
prices. New U.S. and U.K. sanctions on the two largest Russian oil producers, 
Rosneft and Lukoil, and threats of secondary sanctions on buyers of Russian 
energy may curb global supply growth.

   So far, however, Russian crude oil export volumes have proven resilient to 
sanctions. In fact, sanctioned barrels have over the past two months accounted 
for close to a third of the rise in volumes of oil on water.

   The outlook for refined products, meanwhile, remained much less bearish, 
despite a slow growth rate by historical standards. Tight inventories, 
particularly of middle distillates, unplanned refinery outages and attacks on 
Russian downstream infrastructure boosted U.S., European and Asian refinery 
margins, with the latter two reaching two-year highs in October.

    




(c) Copyright 2025 DTN, LLC. All rights reserved.