A consistent theme of the monthly IEA Oil Market Reports has been the disconnect between benchmark oil prices and the large oversupply building in the global oil market. This month is no different as Brent increased by more than USD 10/bbl in January largely due to geopolitical tensions between Iran and the US - the ongoing negotiations continue to move the oil price as any disruption to the Strait of Hormuz remains the key risk to oil flows. Additionally, cold weather disrupted 1mb/d of US production last month, further strengthening price.
In the report out this morning, the IEA maintains its forecast for global oil supply growth of 2.4mb/d in 2026, with half of this coming from OPEC+ and the remainder led by the likes of Brazil, US, Guyana and Canada. On the demand side, the IEA has made a small downgrade to its demand growth estimates for 2026, now at 850kb/d annual growth, due to economic uncertainty and the expectation that higher oil prices weigh on consumption.
With supply surpassing demand, global oil inventories have continued to build and reached 477mb at the end of 2025, near levels last seen in 2020. However, relatively tight crude inventories in key pricing hubs (the US and Atlantic Basin more broadly) as well as ongoing geopolitics continue to keep oil prices tight.
Demand:
. The IEA forecast global oil demand growth of 850 kb/d in 2026 up from 770kb/d in 2025.
. This demand uplift is driven by a normalisation of economic conditions after a tariff-ridden 2025, energy efficiency improvements and strong EV sales.
. But this is 80kb/d lower than last month''s IEA estimate due to economic uncertainties and higher oil prices.
. Petrochemical feedstock products will contribute to more than half of 2026''s demand growth, a shift from transport fuels historically.
Supply:
. Global oil supply is expected to grow by 2.4mb/d in 2026 (to 108.6mb/d) vs an increase of 3.1mb/d in 2025.
. This growth is from a slightly lower base level as world...
