World oil market faces even larger 2026 surplus, IEA says

LONDON: The global oil market faces an even bigger surplus next year of as much as 4.09 million barrels per day as OPEC+ producers and rivals lift output and demand growth slows, the International Energy Agency said on Thursday.

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IEA projects oil supply to rise by 3.1 million bpd in 2025 and 2.5 million bpd in 2026, widening surplus.
Global inventories hit highest since 2021, driven by waterborne storage increases.
Despite sanctions, Russian exports remain steady while OPEC sees a more balanced market next year.

"Global oil market balances are looking increasingly lopsided, as world oil supply is forging ahead while oil demand growth remains modest by historical standards," the IEA said in its monthly report for November.

The agency expects global oil supply to grow by around 3.1 million barrels per day (bpd) in 2025, and 2.5 million bpd next year, each up by around 100,000 bpd on the month.

That will take the IEA's implied 2026 surplus 120,000 bpd wider from the 3.97 million bpd mismatch between supply and demand for next year suggested from its October report.

The short-term outlook in the IEA's monthly report contrasts with the agency's annual outlook on Wednesday, which sees global oil and gas demand potentially rising until 2050.

RAPID SUPPLY GROWTH

Global oil output was 6.2 million bpd higher in October than at the start of this year, divided evenly by OPEC+ and non-OPEC producers, the IEA said.

Saudi Arabia contributed 1.5 million bpd of the increase, while Russia added just 120,000 bpd amid sanctions and Ukrainian attacks.

Despite new U.S. sanctions on Russian firms Rosneft ROSN.MM and Lukoil LKOH.MM, that "may have the most far-reaching impact yet on global oil markets," Russian exports have "continued largely unabated," the IEA said.

The agency also raised its demand growth forecasts by 80,000 bpd for 2025 and 70,000 bpd for 2026, citing increased petrochemical feedstock needs.

OPEC sees a more balanced market next year, with a surplus of just 20,000 bpd according to Reuters calculations based on its own monthly oil marker report on Wednesday.

WATERBORNE STOCK LEVELS SURGE

The Paris-based watchdog also drew attention to a sharp rise in global oil inventories, which rose to their highest since July 2021 in September at just under 8 billion barrels.

The increase was driven by a sharp increase in waterborne oil in storage, which rose by 80 million barrels in September.

The agency added that preliminary October data shows further rises for global stocks, again driven by increasing waterborne barrels.