The IEA today cut its oil demand growth forecast for 2026, but its estimate of a substantial supply surplus remains.
In its February Oil Market Report (OMR), the Paris-based agency said it sees demand increasing by 850,000 b/d this year, lower than the 930,000 b/d it forecast in its January OMR, because a rally in prices in the first few weeks of the year will have "weighed on growth prospects."
The front-month Ice Brent price rose by $10/bl in January and closed above $70/bl for the first time since July 2025, pushed higher by a combination of supply outages and escalated tensions between the US and Iran.
The IEA's new demand growth forecast puts overall demand in 2026 at 104.87mn b/d. Demand will peak in the fourth quarter at above 106mn b/d, the agency said. Highlighting how these estimates are subject to change, the IEA's first take on 2026 demand growth, made in April 2025, was for 690,000 b/d.
Its estimates continue to diverge wildly from those made by Opec's research unit, which this week forecast oil demand will grow by 1.38mn b/d to 106.52mn b/d in 2026.
The IEA's 2026 supply forecast is for growth of 2.4mn b/d to 108.56mn b/d, assuming Opec+ maintains its current production plan.
This results in a supply surplus of 3.7mn b/d, the same as in its January OMR.
The IEA said its December data show a 37mn bl rise in global oil inventories, taking stockbuilds in 2025 to "an extraordinary" 477mn bl, or 1.3mn b/d. It said this level was last seen in the pandemic year of 2020.
"As global refinery activity declines seasonally from an all-time high reached in December, and oil supply recovers from recent outages, it remains to be seen when surplus barrels finally move ashore in the Atlantic Basin," it said.
