Ample global oil supply is allaying concerns about geopolitical risks to oil production and exports in Venezuela, Iran and Russia, the IEA said today.
"While it is too early to assess the full implications for oil markets of these latest geopolitical developments, for now, bloated balances provide some comfort to market participants and have kept prices in check," the IEA said.
In its first Oil Market Report (OMR) of the year, the IEA said it still sees subdued oil demand growth and a large supply surplus for 2026. The Paris-based watchdog increased its oil demand growth forecast for 2026 by 70,000 b/d to 930,000, driven by higher expectations from Asia-Pacific and Africa. This would see overall demand at 104.98mn b/d.
As widely expected, the agency sees relatively weak first quarter year-on-year growth of 840,000 b/d — supported by higher-than-expected heating demand — picking up to around 1mn b/d in the second half. But it said a "significant surplus" is likely to re-emerge in the current quarter as refiners begin maintenance, and said 2026 demand will be "tempered by sub-par global GDP growth, energy efficiency improvements and robust EV sales in some markets."
The agency sees global oil supply growing by 2.5mn b/d in 2026. Barring a change in Opec+ production policy and possibly lower output from US shale producers, the supply surplus would be 3.7mn b/d.
This would follow a 2.1mn b/d supply surplus in 2025, when the agency said oil demand grew by 850,000 b/d to 104.05mn b/d and supply increased by 3.05mn b/d to 106.19mn b/d.
"Last year's surge in trade policy uncertainty and economic risk aversion weighed heavily on commercial activity in emerging economies, causing oil demand to stagnate," the IEA said.
The IEA first outlined its 2025 oil demand forecasts in April 2024, when it projected consumption growth of 1.15mn b/d. This time last year it saw annual demand growth of 1.05mn b/d in 2025.
The IEA's demand estimates for 2025 remain well below those of Opec, which sees oil consumption up by 1.3mn b/d to 105.14mn b/d. Opec sees oil demand rising by 1.38mn b/d in 2026 and by 1.34mn b/d in 2027.
The IEA said global observed stocks rose by 75mn bl, or 2.5mn b/d, in November. It said preliminary data show further builds in December, after China issued new import quotas that had offset steep inventory declines in several Middle East countries at the end of 2025.
