The International Energy Agency (IEA) has significantly increased its forecasts for global oil supply, cautioning about a potential surplus by 2026 as Opec+ and other producers ramp up production amid weak demand growth.
In its October Oil Market Report, the IEA now anticipates supply to grow by 3.0 million barrels per day (bpd) in 2025, up from the previous forecast of 2.7 million, and expects an additional 2.4 million bpd rise in 2026.
Conversely, demand is expected to lag. The agency has reduced its 2025 demand growth forecast to 710,000 bpd, a decrease of 30,000 bpd, with a similar increase of around 700,000 bpd predicted for 2026—below long-term averages. The IEA describes this as a “sharp deceleration in oil consumption growth,” influenced by economic challenges and the rapid shift to electric vehicles.
This scenario could lead to a widening supply-demand gap. The IEA predicts global supply may surpass demand by up to 4 million bpd in 2026, compared to a 3.3 million bpd surplus in its previous forecast. Some reports estimate a 2026 surplus of 2.96 million bpd, a record high. In September alone, global supply increased by 5.6 million bpd compared to last year, with Opec+ contributing 3.1 million bpd of that growth.
Opec+ (comprising Opec and its allied producers) has been hastening the reversal of prior production cuts, increasing the flow of crude into the market. Recent data indicate Russia’s output continued to rise in September, reaching 9.321 million bpd. Outside Opec+, countries like the US, Canada, Brazil, and Guyana are also boosting supply.
The IEA’s perspective contrasts with Opec’s more optimistic outlook. Opec anticipates a closer balance between supply and demand in 2026, thanks to slower non-Opec+ growth and stronger global consumption. Opec currently projects demand growth of 1.38 million bpd in 2026, an increase of 100,000 bpd from previous estimates.
Price predictions reflect this tension. Analysts surveyed by Reuters now estimate Brent crude will average $67.61 per barrel in 2025, almost unchanged from earlier forecasts, with downside risks if the surplus occurs. Meanwhile, Barclays has lowered its 2025 and 2026 forecasts to $66 and $60, respectively, due to mounting supply pressures. Goldman Sachs is more cautious, expecting Brent to be $60 in 2025 and $56 in 2026.
Some industry experts believe the oversupply may not last. Executives from major oil companies foresee a medium-term market rebalancing, driven by reduced output from high-cost producers. The CEO of TotalEnergies warned that non-Opec production could decline if prices fall to around $60 per barrel, limiting the downside risk.
Nonetheless, the short-term outlook is challenging. The IEA notes that supply is outpacing demand significantly and expects minimal demand growth for the rest of 2025. It warns of a global oil market that is increasingly “bloated,” caught between high production ambitions and the realities of energy transition.
