In its latest monthly report released on Tuesday, the Paris-based agency projected that the 2026 glut could exceed earlier forecasts of 3.3 million bpd, signalling one of the largest imbalances in recent years — equivalent to almost 4% of global demand.
The IEA’s outlook contrasts sharply with that of OPEC, which maintains a more optimistic view of consumption and expects demand growth to remain robust.
Rising Supply, Weak Demand
The agency said oil output is rising much faster than consumption as OPEC+, Russia, and other allies accelerate the unwinding of earlier production cuts. The decision has increased market fears of an impending glut and has already weighed on prices, with Brent crude slipping below $62 a barrel on Tuesday — though still above the year’s low of $58 in April.
The IEA now expects global supply to rise by 3 million bpd this year, up from an earlier forecast of 2.7 million bpd, and by another 2.4 million bpd in 2026.
In contrast, demand is expected to grow by only 710,000 bpd this year — 30,000 bpd less than previously projected — due to a slower global economy and the accelerating shift toward electric transport.
“Oil use will remain subdued over the remainder of 2025 and in 2026,” the IEA said, noting that annual demand gains will hover around 700,000 bpd — well below historical trends.
Oversupply Building Across Producers
According to the report, global oil supply in September was up by 5.6 million bpd compared to a year earlier, with OPEC+ contributing 3.1 million bpd of that increase.
The agency also observed a sharp jump in seaborne oil shipments, which rose by 102 million barrels last month — the largest monthly increase since the COVID-19 pandemic — driven largely by surging output in the Middle East.
Beyond OPEC+, production growth is also expected from the United States, Canada, Brazil, and Guyana, further exacerbating the supply-demand imbalance.
Diverging Forecasts
While the IEA projects one of the steepest surpluses in recent memory, OPEC maintains that supply and demand will remain closely aligned next year. The cartel expects demand to rise by 1.3 million bpd in 2025, nearly double the IEA’s projection, citing steady global economic performance.
A Reuters poll of analysts in September also offered a more modest view, predicting an oversupply of around 1.6 million bpd in 2026 — far below the IEA’s warning.
The agency’s forecast underscores its longer-term view that renewable energy adoption and slower economic growth will continue to dampen oil consumption, even as major producers ramp up output.
With oil prices already under pressure and inventories swelling, analysts say the market could face renewed volatility if producers fail to adjust course in the coming months.