IEA Monthly Report: Record Oil Surplus May Occur Next Year

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The International Energy Agency (IEA) stated that the current oil supply surplus has exceeded expectations, and the global oil market will experience a record supply glut next year, with oil prices remaining under pressure.

In its latest monthly report, the IEA said that global oil supply next year will exceed demand by nearly 4 million barrels per day, an unprecedented annual surplus. As the OPEC+ alliance continues to increase production and its competitors are expected to boost capacity, the IEA has raised its forecast for the 2026 supply surplus by about 18% compared to last month.

As demand growth in major oil-consuming countries cools, the oil surplus is intensifying. Meanwhile, the OPEC+ alliance has resumed paused production, and its competitors in the Americas continue to expand rapidly. Brent crude futures are near $62 per barrel, down 15% so far this year.

Although Goldman Sachs and JPMorgan expect the market to fall further, so far, oil prices have not experienced the crash predicted earlier when Saudi Arabia and its partners opened up oil supply. The IEA said that part of the reason is that most of the surplus is in the form of natural gas liquids (NGLs), used as petrochemical feedstock, rather than crude oil.

Meanwhile, supply outside of OPEC and its partners will nearly double, led by the United States, Brazil, Canada, Guyana, and Argentina. Next year, non-OPEC+ countries will increase supply by 1.2 million barrels per day, about 200,000 barrels per day higher than the IEA's estimate last month.

Major OPEC+ countries continue to restore previously paused production, apparently to regain their share in the global oil market. The IEA stated that with Saudi Arabia leading member states in completing the first batch of supply restarts, OPEC+'s oil production surged by nearly 1 million barrels per day in September.

The IEA warns that the supply surplus in 2026 will be the largest annual surplus ever.

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