China is continuing to stockpile crude oil, helping to absorb a large global supply surplus, the IEA said today.
Global oil stocks rose for a sixth consecutive month in July, adding 26.5mn bl and bringing cumulative growth since January to 187mn bl, the IEA said in its latest Oil Market Report (OMR).
Chinese crude stocks have increased by 106mn bl between February and August, the agency said. But it did not say how long China might continue absorbing excess crude from the market.
The IEA's latest forecasts show global supply exceeding demand by an "untenable" 2.5mn b/d in the second half of 2025 and about 3mn b/d in 2026.
The Paris-based agency nudged up its global oil demand growth forecast for this year by 50,000 b/d to 740,000 b/d, bringing total consumption to 103.87mn b/d. It said the upgrade was driven by "resilient OECD oil demand in the face of an uncertain macro climate." The agency pointed to strong data from the US, Germany, Italy and South Korea.
It kept its demand growth forecast for 2026 unchanged at 700,000 b/d, which would bring total demand to 104.57mn b/d.
On the supply side, the IEA upgraded its growth forecast by 190,000 b/d to 2.7mn b/d in 2025 and by 150,000 b/d to 2.1mn b/d in 2026. This would put full-year supply at 105.8mn b/d this year and 107.9mn b/d next year.
The IEA attributed the revisions to stronger-than-expected output in Brazil, Argentina and Norway, and recent gains in Opec+ members including Iraq, Venezuela, Libya and Kuwait.
Eight core Opec+ members began unwinding 2.2mn b/d worth of production cuts in April and are set to start unwinding another layer worth 1.65mn b/d from October.
Despite the projected surplus, the IEA warned that market balances could shift due to geopolitical and policy risks.
"There are a number of potential twists and turns ahead – including geopolitical tensions, trade policies and additional sanctions on Russia and Iran – that could yet alter market balances," it said.
