IEA Forecasts Record 2.96M BPD Oil Surplus in 2026 as Demand Growth Stagnates

The International Energy Agency (IEA) has projected that the global oil market will face a record surplus of 2.96 million barrels per day in 2026, surpassing the inventory build seen during the peak of the 2020 pandemic. This outlook is rooted in a continued slowdown of global demand growth, which has fallen to less than half the rate observed in 2023 [1]. The IEA warns that despite this moderation, supply continues to outpace demand, driven by production increases from both OPEC+ and non-OPEC+ countries [2].

OPEC+ has been gradually ramping up output, with Saudi Arabia at the forefront of restoring production previously curtailed during the pandemic. The group is on track to increase its output by 2.2 million barrels per day by the end of 2024, reversing earlier cuts [3]. Meanwhile, non-OPEC+ producers such as the United States, Canada, Guyana, and Brazil are also contributing to the surge in supply. The IEA has revised its 2026 output forecasts upward by 100,000 barrels per day for these regions, warning that the imbalance between supply and demand is worsening [4].

Global oil demand is expected to rise by only 680,000 barrels per day in 2025 and 700,000 barrels per day in 2026, far below the levels needed to absorb the projected surplus. This weak demand growth is being driven by slower economic activity in key markets, including China, India, and Brazil. The IEA also anticipates that demand growth will stagnate by the end of the decade as the transition to cleaner energy and electric vehicles continues to gain momentum [5].

The growing surplus has already had visible impacts on oil prices, which have fallen by 12% so far this year, with Brent crude trading around $66 per barrel. Lower prices, while beneficial for consumers and President Donald Trump’s push for cheaper fuel, pose challenges for oil producers, particularly those with high production costs [6]. The market is also showing early signs of oversupply, with global oil inventories reaching a four-year high in June 2025 [7].

OPEC+’s ability to manage the supply glut remains uncertain. The group has not yet committed to any specific production path for the remainder of the year, leaving open the possibility of further output increases or additional cuts. The IEA notes that while OPEC+ output slightly declined in July due to production restraint by Saudi Arabia during regional tensions, non-OPEC+ supply has continued to grow. For example, the United Arab Emirates recently pushed its output to 3.5 million barrels per day, exceeding its OPEC+ quota [8].

The outlook is further complicated by external factors such as the potential for new sanctions on oil-producing countries like Russia and Iran. However, the IEA believes that the broader trend of supply exceeding demand is likely to persist unless there are significant policy or market interventions. The agency emphasized that "something will have to give for the market to balance," indicating that either production cuts, demand shifts, or price corrections may be necessary to restore equilibrium [9].

As the market braces for a potential record surplus in 2026, stakeholders are closely watching OPEC+’s next moves and global economic developments. A prolonged period of oversupply could exert further downward pressure on prices and test the resilience of oil-producing nations and companies. Investors and energy analysts are preparing for a volatile period ahead as the global oil market navigates a rapidly changing landscape.

Sources:

[1] https://www.bloomberg.com/news/articles/2025-08-13/global-oil-markets-face-record-supply-glut-next-year-iea-says

[2] https://www.cryptopolitan.com/iea-sees-record-oil-surplus-in-2026/

[3] https://www.ft.com/content/3d8061f6-97f1-440e-82e6-01ca2227b837

[4] https://energynews.oedigital.com/fossil-fuels/2025/08/13/iea-increases-2025-oil-forecast-following-opec-decision-to-increase-output

[5] https://www.eia.gov/outlooks/steo/report/global_oil.php

[6] https://www.eia.gov/outlooks/steo/

[7] https://www.fastbull.com/news-detail/base-metals-mixed-softerthanexpected-us-cpi-data-may-news_8500_0_2025_3_3956_3/8500_XAUUSD

[8] https://coinmarketcap.com/community/articles/689c7e39b2de5232cc53594f/