LONDON: The International Energy Agency (IEA) has reduced its forecast for the global oil surplus in 2026 for the first time since May, citing stronger-than-expected economic conditions and lower output from sanctioned countries.
The agency’s monthly oil market report shows that global supply is now expected to exceed demand by 3.84 million barrels per day (bpd) next year—down from the 4.09 million bpd surplus projected in November. Despite the revision, the nearly 4 million bpd surplus still represents around 4 percent of global demand and remains at the upper end of market expectations.
Oil prices remained under pressure on Thursday, with Brent crude—already down more than 15% in 2025—trading below $62 per barrel.
This year’s supply surge was driven by production increases from OPEC+ members, the United States, and other key producers. OPEC+ has since paused further output hikes for the first quarter of 2026.
On the demand side, the IEA revised up its global growth forecasts for both 2025 and 2026, pointing to an improved macroeconomic outlook and easing concerns over trade tariffs. The agency now expects world oil demand to rise by 860,000 bpd in 2026, an increase of 90,000 bpd from last month’s estimate. Demand growth for 2025 was also raised by 40,000 bpd to 830,000 bpd.
The IEA noted that falling oil prices and a weaker US dollar—both near four-year lows—are providing additional support to fuel consumption. It added that demand expansion in 2025 is driven almost entirely by non-OECD economies, which are more sensitive to global economic conditions.
A series of breakthroughs in US trade negotiations has also helped restore confidence after earlier tariff-related tensions dampened demand, the agency said.
By Reuters
