The International Energy Agency (IEA) has significantly raised its projections for global oil supply, warning of a swelling surplus in 2026 as Opec+ and other producers boost output against a tepid demand backdrop.

In its October Oil Market Report, the IEA pegged supply growth at 3.0 million barrels per day (bpd) in 2025 - up from its earlier estimate of 2.7 million - and expects a further 2.4 million bpd increase in 2026.

Meanwhile, demand is forecast to underperform. The agency trimmed its 2025 demand growth estimate to 710,000 bpd, down by 30,000 bpd, and expects a similar uptick in 2026 of about 700,000 bpd-well below long-term trends. The IEA describes this as a“sharp deceleration in oil consumption growth,” driven by macroeconomic headwinds and accelerating electrification in transport.

Under those conditions, the imbalance could widen into a glut. The IEA sees global supply exceeding demand by as much as 4 million bpd in 2026, compared with a 3.3 million bpd surplus in its prior forecast. Some reports suggest the 2026 surplus could reach 2.96 million bpd, a record level. In September alone, global supply was up 5.6 million bpd year-on-year, with Opec+ responsible for 3.1 million bpd of that gain.

Opec+ (that is, Opec plus its allied producers) have moved aggressively to unwind prior production cuts faster than planned, accelerating the release of crude into the market. Recent data show Russia's output continued rising in September, reaching 9.321 million bpd. Outside Opec+, producers such as the US, Canada, Brazil, and Guyana are also contributing to the supply surge.

The IEA's outlook contrasts sharply with that of Opec. The latter maintains a more optimistic view: Opec expects supply and demand to closely balance in 2026, thanks to more modest non-Opec+ expansion and stronger global consumption. Opec's current outlook envisages 1.38 million bpd demand growth in 2026, up 100,000 bpd from previous estimates.

Price forecasts reflect the tension. Analysts polled by Reuters now project Brent crude will average $67.61 per barrel in 2025, nearly flat on earlier forecasts, with risks tilted to the downside if the surplus materializes. Meanwhile, Barclays has trimmed its 2025 and 2026 forecasts to $66 and $60, respectively, citing intensifying supply pressures. Goldman Sachs is even more cautious, expecting Brent at $60 in 2025 and $56 in 2026.

Some industry voices argue the oversupply may not persist indefinitely. Executives at major oil companies foresee a medium-term rebalancing, driven by declining output from higher-cost producers. TotalEnergies' CEO warned that non-Opec output could start to shrink if prices fall to around $60 per barrel, limiting downside risk.

Still, the near term looks challenging. The IEA notes that supply is rising much faster than demand and expects little pickup for the remainder of 2025. Its warning is stark: a global oil market increasingly“bloated,” entangled in the clash between production ambition and energy transition realities.

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