The International Energy Agency (IEA) is warning that the global oil market faces a surplus in 2026 of as much as four million barrels per day.
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The IEA says that a huge glut of oil is likely to form over the next year as OPEC+ producers continue to raise their production even as worldwide demand remains sluggish. The latest outlook from the IEA builds on its earlier prediction of a 2026 surplus of about 3.3 million barrels per day.
A surplus of four million barrels per day would be equal to almost 4% of world energy demand. OPEC+ recently added more crude to the market after the Organization of the Petroleum Exporting Countries and its allies decided to unwind some output cuts faster than scheduled. The extra supply is adding to fears of an oil glut and weighing down prices.
Supply vs. Demand
In the IEA’s view, supply is rising faster than demand globally, exerting downward pressure on oil prices. This year, the agency expects supply to rise by three million barrels per day, up from 2.7 million barrels per day previously. Next year, supply is forecast to rise a further 2.4 million barrels per day.
The IEA also trimmed its forecast for world demand growth this year to 710,000 barrels per day, down 30,000 barrels per day from an earlier forecast. West Texas Intermediate (WTI) crude oil, the American standard, is currently trading at $58.86 a barrel, while Brent crude oil, the international benchmark, is trading at $62.53 per barrel.
The current situation is also weighing on the share prices of oil majors such as Chevron (CVX), Occidental Petroleum (OXY), and British Petroleum (BP).
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