While the start of the year has been marked by geopolitical volatility, the IEA''s latest Oil Market Report (OMR) published this morning highlights the huge oversupply that still hangs over the oil market.
Global oil supply increased by 3mb/d in 2025, with non-OPEC+ producers - mostly US, Canada, Brazil, Guyana - making up for 60% of the growth. The remainder was largely led by Saudi Arabia, in line with the OPEC+ production unwind plan. At the same time, 2025 saw a large 400mb build in global crude oil inventories with nearly half of this being oil-on-water from sanctioned countries Russia, Iran, and Venezuela. Moreover, large crude builds in China added to this build and supported oil demand particularly through the summer months.
In 2026, the IEA forecasts a 2.5mb/d supply build, assuming that OPEC+ stays on course with its policy and accounting for further gains from the non-OPEC+ producers. Meanwhile demand is forecast to grow by just under 1mb/d in 2026, pointing to a significantly oversupplied market. The IEA therefore expects a particularly weak Q1''26 for oil markets as refinery maintenance season reduces demand for crude. This assumes no major disruptions to supplies in Iran or Venezuela, but as always, geopolitics remains the key swing factor.
Demand:
. The IEA forecast global oil demand growth of 930 kb/d in 2026 up from 850kb/d in 2025.
. This demand uplift is driven by a normalisation of economic conditions after a tariff-ridden 2025, lower oil prices expected in the year ahead, sub-par global GDP growth, energy efficiency improvements and strong EV sales.
. IEA still expects higher petrochemical demand in 2026 but a slowdown in gasoline demand.
Supply:
. Global oil supply is expected to grow by 2.5mb/d in 2026 (to 108.7mb/d total) vs. an increase of 3mb/d in 2025.
. Non-OPEC+ accounted for 60% of supply growth in 2025 and is expected to account for 52% of the growth in 2026 - this is 1.3mb/d led by the Americas (Brazil, US, Guyana,...
