The International Energy Agency (IEA) warned this week that world oil supply is set to rise much faster than demand, creating the risk of a significant surplus into 2026, in sharp contrast to OPEC’s more upbeat outlook. The IEA now projects global supply will increase by 2.7 million barrels per day (bpd) in 2025 and a further 2.1 million bpd in 2026, driven by both OPEC+ unwinding cuts more quickly and rising production from the U.S., Canada, Brazil, and Guyana.
While the agency slightly raised its 2025 demand growth forecast to 740,000 bpd, this remains well below OPEC’s estimate of 1.29 million bpd, with the IEA emphasizing the structural impact of renewable energy adoption. The supply surge, alongside sanctions risks on Russia and Iran, has already weighed on oil markets, with Brent crude slipping below $67 a barrel despite being higher than April’s $58 low.
The IEA sees inventories building at an “untenable” 2.5 million bpd in the second half of 2025 and an implied surplus of 3.3 million bpd in 2026, while OPEC’s own calculations point instead to a potential deficit of 700,000 bpd if output stays steady.
This divergence underscores a widening split between the two organizations’ outlooks, even as Saudi Arabia pushes OPEC+ to lift output and China’s stockpiling helps keep near-term prices supported through market backwardation.
