Global Oil Supply Set to Rise Faster Than Expected, Says IEA
The International Energy Agency (IEA) announced on Wednesday that global oil supply will increase more quickly than previously predicted in 2025 and 2026. This boost is driven by OPEC+ countries ramping up production and stronger output from non-OPEC producers like the U.S., Canada, Brazil, and Guyana.
According to the IEA’s latest monthly report, oil supply is expected to grow by 2.5 million barrels per day (bpd) in 2025—an increase from the earlier forecast of 2.1 million bpd—and by another 1.9 million bpd in 2026.
This faster supply growth comes after OPEC+, which includes the Organization of the Petroleum Exporting Countries, Russia, and their allies, decided to reverse recent production cuts more quickly than planned. Along with concerns about economic impacts from U.S. tariffs, these factors have put downward pressure on oil prices this year.
On the demand side, the IEA predicts slower growth. Global oil demand is expected to rise by 680,000 bpd this year and 700,000 bpd next year—both slightly lower than earlier estimates. The agency notes weak demand in major economies and low consumer confidence, making a strong rebound unlikely soon.
“The oil market looks increasingly oversupplied,” the IEA said, linking the higher supply forecast to OPEC+’s increased production targets.
The IEA’s demand outlook is more conservative than some industry estimates, partly because it expects a faster shift toward renewable energy sources. For comparison, OPEC forecasts demand growth of 1.29 million bpd this year, nearly double the IEA’s estimate.
Following the report’s release, Brent crude oil prices fell below $66 per barrel, reflecting concerns about the growing supply surplus.
Supply Surplus Expected to Widen
The report suggests that oil supply could exceed demand by nearly 3 million bpd next year. While OPEC+ is increasing production, most supply growth will come from non-OPEC countries such as the U.S., Canada, Brazil, and Guyana.
However, sanctions on major producers Russia and Iran may limit their output. The U.S. recently imposed new sanctions on Iran, and the European Union tightened price caps on Russian oil to restrict Moscow’s revenue.
“It’s clear the market will need to adjust for balance to be restored,” the IEA said.
Meanwhile, China’s ongoing efforts to build strategic oil reserves may help absorb some of the surplus supply, which has helped support prices earlier this year.
Refining Activity Hits New Highs
Despite lowering its demand forecasts, the IEA expects global oil refining rates to reach a record 85.6 million bpd in August, up from 84.9 million bpd in July. Refinery activity is projected to grow further in 2025 and 2026, driven by economic recovery in OECD countries and China.
The agency forecasts refinery runs will increase by 670,000 bpd to 83.6 million bpd in 2025 and then rise by another 470,000 bpd to 84 million bpd in 2026.