Surging supply and slowing demand growth lead to the largest increase in global crude oil inventories in 2025 since 2020.

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On February 12, the latest monthly report from the International Energy Agency (IEA) shows that with supply surging and demand growth slowing, global crude oil inventories in 2025 will accumulate at the fastest pace since 2020. Total inventory will increase by 477 million barrels for the year, with OECD country inventories exceeding the five-year average for the first time in four years.

IEA also lowered its forecast for oil demand growth this year, as uncertain economic prospects and persistently high oil prices are suppressing consumption. It is expected that by 2026, global daily supply surplus will exceed 3.7 million barrels, potentially setting a new annual surplus record.

However, oil prices have not weakened in line with fundamentals. This week, Brent crude oil once broke through $70/barrel, with geopolitical risks becoming the main driver. The IEA stated that “tight inventories at pricing hubs” offer short-term support to the market.

Traders are currently watching to see if oversupply will spread to the Atlantic Basin. The IEA stated that when surplus crude oil reaches key consumer regions remains a core variable influencing the future price path.

Supply-demand imbalance drives inventory surge

In 2025, global crude oil inventories will increase sharply by 477 million barrels, driven by simultaneous reversals on both supply and demand sides. On the supply side, OPEC+, led by Saudi Arabia, is resuming previously paused production. Meanwhile, oil producers in the Americas—United States, Brazil, Canada, and Guyana—continue to expand production, forming dual supply pressure.

The demand side is showing weakness. The IEA estimates that global oil demand growth will slow to 769,000 barrels per day in 2025. The agency expects demand in 2026 to grow at 849,000 barrels per day, with a total reaching 104.87 million barrels per day, below predictions made by Goldman Sachs and other Wall Street institutions.

Entering January 2026, global crude oil supply contracts, with production plunging by 1.2 million barrels per day for the month. The IEA did not specifically attribute this to a particular cause, but geopolitical risks and regional production disruptions are considered major factors.

OPEC+ decisions are the key variable

The actual scale of global crude oil supply surplus this year will mainly depend on OPEC+’s next production decisions. After a significant production increase last year, the alliance faces adjustment pressure, has agreed to pause increases in the first quarter, and will hold a meeting on March 1 to decide whether to resume production hikes.

On the demand side, the IEA lowered its oil demand growth forecast this month, reversing last month’s upward revision, reflecting a cautious outlook on the market. Despite the expected record supply surplus in 2026, geopolitical risks and ongoing supply disruptions in multiple regions continue to provide bottom support for oil prices.

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