IEA forecasts rapid rise in global oil supply

Core Insights - The International Energy Agency (IEA) projects a significant increase in global oil supply, with a surplus expected to grow by 2026 due to OPEC+ and non-OPEC+ output increases [1][3] - OPEC+ has agreed to raise production targets, planning to increase output by 137,000 barrels per day (bpd) in October following a decision to unwind supply cuts [2] - The IEA has revised its global demand growth forecast to 740,000 bpd, indicating that supply is outpacing demand, which could lead to an "untenable" increase in global inventories [3][4] Supply Dynamics - The IEA forecasts a rise in global oil supply by 2.7 million barrels per day (mbbl/d) to 105.8 mbbl/d by 2025, followed by an additional increase of 2.1 mbbl/d to 107.9 mbbl/d in 2026 [1] - OPEC+ plans to fully implement a tranche of cuts amounting to 1.65 mbbl/d over the next year, with 2 mbbl/d of cuts still in place [2] Market Conditions - Benchmark crude oil prices have declined, with ICE Brent futures dropping by approximately $2 per barrel month-on-month to $67/bbl [3] - China's stockpiling of crude is contributing to a market condition known as backwardation, where immediate delivery prices are higher than future contract prices [4] Future Considerations - The IEA notes potential market volatility due to geopolitical tensions, trade policies, and sanctions on Russia and Iran, which could impact supply and demand dynamics [5]