IEA cuts 2026 oil glut forecast for first time since May

• Surplus to reach 3.84m bpd in 2026
• Forecast down 250,000 bpd from November
• Brighter outlook supports demand

The International Energy Agency trimmed its forecast of next year’s global oil supply glut for the first time since May on Thursday, flagging higher demand prospects due to a stronger world economy and lower supply from nations under sanctions.

Oil prices have been under pressure for months due to predictions from the IEA, which advises industrialised countries, and other analysts of a looming glut.

Global oil supply will exceed demand by 3.84 million barrels per day, according to figures from the Paris-based IEA’s latest monthly oil market report, down from a 4.09 million bpd surplus estimated in November.

A surplus of almost 4 million bpd is still equal to almost 4 percent of world demand and is at the higher end of analysts’ predictions. Oil was trading lower on Thursday, with Brent crude – down over 15 percent in 2025 – trading below $62 a barrel.

Supply rose sharply this year boosted by output hikes from the Organisation of the Petroleum Exporting Countries and its partners – the group known as Opec+ – as well as growth in the United States and other producers.

Opec+ has now paused output increases for the first quarter of 2026.

Opec kept its global demand growth forecast for next year unchanged in its own monthly report, also released on Thursday. Data in Opec’s report indicated that world oil supply will match demand closely in 2026, in contrast to the IEA’s view.

Higher demand as tariff jitters subside

The IEA revised up its global oil demand growth forecasts for this year and next due to an improving macroeconomic outlook and with “anxiety about tariffs having largely subsided”.

World oil demand is expected to rise in 2026 by 860,000 bpd, up 90,000 bpd from last month’s outlook, the IEA said. It raised its 2025 forecast by 40,000 bpd to 830,000 bpd.

“Falling oil prices and the lower US dollar, both currently near four-year lows, act as a further tailwind for oil demand next year,” the IEA said, adding that demand growth in 2025 has come almost entirely from non-OECD countries, which are more reliant on macroeconomic conditions.

A spate of breakthroughs with US trade deals had helped put economic sentiment back on track after tariff-related tensions hit consumption earlier this year, the IEA said.

Supply lower as sanctions hit Russian exports

The agency expects supply growth to be slightly lower than previously anticipated in 2025-2026, as sanctions on Russia and Venezuela hit exports.

The IEA expects global oil supply to rise by 2.4 million bpd next year, having last month predicted supply growth of 2.5 million bpd.

The IEA revised down its 2025 and 2026 output forecasts for Opec+ producers, largely because of sanctions disruptions.

Global oil supply fell by 610,000 bpd on the month in November, the IEA said, due to declining output from sanctions-hit Russia and Venezuela.

Further reading:

• Middle East share of global oil output to surge by 2050
• Frank Kane: Opec+ and UAE on tenterhooks over Lukoil sanctions
• Opec shifts oil forecast to small surplus in 2026

Russian export revenues hit their lowest in November since the full-scale invasion of Ukraine in 2022, the IEA said.

The IEA kept its forecasts for non-Opec+ output stable for this year and next on rising production in the Americas, namely the US, Canada, Brazil, Guyana and Argentina.

A trend of “parallel markets”, where ample crude supply is juxtaposed with tight fuel markets, is likely to persist for some time, it said, amid limited spare refining capacity outside China and EU sanctions on Russian crude-derived fuel exports.