Global oil supply set to grow faster, with potential 2026 surplus, says IEA

The International Energy Agency (IEA) reported on Thursday that global oil supply is projected to increase more quickly than anticipated this year. 

This accelerated growth is attributed to increased output from OPEC+ members and rising supply from non-OPEC+ countries. The IEA's statement also suggested the possibility of a growing surplus in 2026.

In August, global oil supply reached a record 106.9 million barrels per day, the agency said in its September Oil Market Report.

This increase was due to OPEC+ continuing to ease its output cuts and non-OPEC+ supply remaining near all-time highs.

Global output

Global oil production is anticipated to increase by 2.7 million barrels per day this year, reaching 105.8 million bpd. 

For the following year, a further rise of 2.1 million bpd is projected, bringing the total to 107.9 million bpd.

Non-OPEC+ countries are expected to contribute significantly to this growth, accounting for 1.4 million bpd of the increase this year and just over 1 million bpd next year.

The alliance of the Organization of the Petroleum Exporting Countries, Russia, and other allies has opted to accelerate the unwinding of its second phase of output reductions, thereby increasing the crude oil supply to the market. 

This additional supply has led to concerns about a potential surplus, which has put downward pressure on oil prices throughout the current year.

Supply outpacing demand 

The IEA projects a significant increase in global supply, outpacing demand growth. 

Despite this, the IEA revised its world demand growth forecast for the year upward by 60,000 bpd to 740,000 bpd, attributing this to robust deliveries in developed nations.

The IEA said in the report:

The IEA's demand forecasts are conservative, aligning with the lower end of industry projections. 

This is because the agency anticipates a quicker shift towards renewable energy sources compared to other forecasting bodies. 

OPEC, however, projects a higher demand increase than the IEA and is scheduled to release its updated forecasts later on Thursday.

Following the release of the IEA report, oil prices slipped into the red, with Brent crude falling 0.8% just under $67 per barrel.

Surplus threat on the horizon

The IEA reported on Thursday that the global market is oversupplied, projecting an "untenable" average increase of 2.5 million barrels per day in worldwide inventories during the latter half of 2025 due to supply significantly exceeding demand.

The report suggested a potential supply surplus of approximately 3.3 million barrels per day for the upcoming year.

This is attributed to increased supply from OPEC+ and non-OPEC+ producers like the US, Canada, Brazil, and Guyana, coupled with only a modest rise in demand.

Last month's report projected a 2026 surplus of nearly 3 million bpd. However, the IEA stated that this surplus might not occur.

It said:

According to the IEA, China's continued stockpiling of crude oil is contributing to a tight market, as indicated by Brent crude prices for immediate delivery being higher than those for later contracts—a market structure known as backwardation.