Oil Stocks Rise Amid OPEC's Plans to Boost Production Despite Supply Glut Warning

Oil stocks rose despite a warning from the IEA that OPEC nations are ready to increase supply, potentially leading to a supply glut by year-end. The IEA cut its demand growth forecast and warned of a demand-supply imbalance in the last three months of the year. Despite this, BP, Shell, and Chevron shares rose. Analysts warn that the uncertainty is making it harder to fully price in the impact of oversupply.

Oil stocks experienced a rise on Wednesday, despite a warning from the International Energy Agency (IEA) that OPEC nations are poised to increase supply, potentially leading to a supply glut by the end of the year. The IEA's monthly report highlighted that OPEC+ nations are ready to increase their production, which could exacerbate the existing demand-supply imbalance.

The IEA revised its oil supply growth forecast, predicting a 2.5 million barrels per day increase this year, up from its previous estimate of 2.1 million barrels per day. This increase is largely due to the unwinding of voluntary cuts by OPEC+ nations, with Saudi Arabia's output declining from June's highs [1]. Despite the anticipated supply increase, the IEA maintained its demand growth forecast, projecting a 685,000 barrels per day growth this year, down from its earlier estimate of 704,000 barrels per day [1].

The IEA's warning comes as oil prices have been volatile, with Brent crude trading around $66 per barrel and West Texas Intermediate at $63 per barrel. The uncertainty surrounding the meeting between U.S. President Donald Trump and Russian President Vladimir Putin, scheduled for Friday, has added to the market's volatility [2]. Analysts are cautious about the potential impact of the meeting on oil prices, with some expecting it to have little effect on sanctions against Russia, ensuring the country's crude continues to flow to the east and south [2].

Institutional investors have been active in the oil sector, with Tokio Marine Asset Management Co. Ltd. boosting its position in Chevron Corporation (NYSE: CVX) by 3.4% during the first quarter [3]. Chevron reported an earnings per share (EPS) of $1.77 for the last quarter, exceeding analysts' expectations despite a 12.4% year-over-year decline in revenue. The company also announced a dividend of $1.71 per share, with an annualized yield of 4.4% [3].

Despite the IEA's warning, shares of BP, Shell, and Chevron rose on Wednesday. Analysts attribute this to the uncertainty in the market, which has made it difficult to fully price in the impact of potential oversupply. The market remains cautious, with a mix of sell, hold, and buy ratings from various analysts [3]. Chevron's stock opened at $154.38 on Wednesday, with a market capitalization of $266.77 billion and a price-to-earnings ratio of 19.87 [3].

The IEA's report highlights the complex dynamics at play in the global oil market. While the supply outlook remains positive, the demand outlook has been revised downward, indicating a potential imbalance in the coming months. Investors and financial professionals should closely monitor the situation, as the meeting between Trump and Putin could provide further clarity on the market's trajectory.

References:
[1] https://www.marketscreener.com/news/iea-lifts-global-oil-supply-forecast-signaling-bigger-surplus-ahead-ce7c51dbda88f326
[2] https://energynews.oedigital.com/energy-markets/2025/08/13/oil-drops-as-iea-increases-supply-forecast-and-investors-wait-for-usrussian-meeting
[3] https://www.marketbeat.com/instant-alerts/filing-tokio-marine-asset-management-co-ltd-purchases-2459-shares-of-chevron-corporation-nysecvx-2025-08-13/