IEA warns that global oil supply is growing faster than expected and may face serious surpluses in 2026

The Zhitong Finance App learned that the International Energy Agency (IEA) said on Thursday that as OPEC+ member countries further increase production and supply growth in non-OPEC+ countries, global oil supply will grow more rapidly than expected this year, and hinted that there may be an oversupply in 2026.

The agency said in its monthly report that supply will increase by 2.7 million b/d in 2025, up from 2.5 million b/d previously forecast, and a further 2.1 million b/d increase in 2026.

After OPEC, Russia, and other allies decided to lift the second round of production cuts sooner than originally planned, OPEC+ is putting more crude oil into the market. Additional supply has raised concerns about surpluses and is putting pressure on oil prices this year.

According to the IEA, supply is growing much faster than demand — although the agency raised its forecast for global demand growth this year by 60,000 b/d to 740,000 b/d on the grounds that deliveries in advanced economies have shown resilience.

The IEA said in its report: “A range of forces are driving the oil market in a different direction. Against the backdrop of new sanctions against Russia and Iran, which may cause supply losses, the prospects for increased OPEC+ supply and an increasingly bloated oil balance are being counterbalanced.”

The IEA's demand forecast is at the low end of the industry as the agency anticipates that the transition to renewable energy will be faster than some other forecasting agencies expect. OPEC believes demand growth will exceed IEA forecasts, and the organization will update its forecast later Thursday.

Imbalance between supply and demand

The IEA has always said that the global market appears to be oversupplied. The report on Thursday said that as supply far exceeds demand, global inventories will increase by an average of “unsustainable” 2.5 million b/d in the second half of 2025.

The report suggests that next year's supply may be about 3.3 million b/d higher than demand due to increased supply from OPEC+ and non-OPEC+ producers such as the US, Canada, Brazil, and Guyana, while demand expansion is limited. Last month's report suggested a surplus of nearly 3 million b/d in 2026.

However, the IEA said the excess may not become a reality.” There are many potential twists ahead — including geopolitical tensions, trade policies, and additional sanctions against Russia and Iran — factors that could alter the balance of the market.” The agency said.

According to the IEA, China continues to reserve crude oil, which helps make the instant delivery price of Brent crude oil higher than that of forward contracts. This structure known as “spot premium” indicates tight market supply.