The oil glut will last into 2026. Here's why it's unclear how big it will be.

Core Viewpoint - The oil market, previously expected to face a significant glut, may not experience as severe an oversupply due to recent geopolitical developments, particularly US sanctions on Russia's major oil producers [1][2]. Supply and Demand Dynamics - Current oil glut is approximately 1.9 million barrels per day, with expectations that it will persist through 2026, but geopolitical factors may limit its growth [2]. - Demand remains robust, particularly from China, which has been stockpiling oil reserves, absorbing surplus that could have depressed prices [4]. - Middle Eastern demand has also been stronger than anticipated, and India has increased its purchases of cheaper Russian crude [4]. Production Trends - OPEC+ has consistently raised production targets for six consecutive months, with a recent increase of 137,000 barrels per day agreed upon in early October [5]. - There is a significant amount of oil, approximately 1.4 billion barrels, currently on tankers globally, indicating a potential oversupply situation [5]. Market Pricing - Brent crude futures have decreased over 13% since the start of the year, trading around $64, while West Texas Intermediate has fallen over 14% to around $60 [3]. - Despite the decline, both benchmarks have shown relatively stable trading patterns over the past six months [3]. Future Projections - The International Energy Agency projects that oversupply could reach an "untenable" four million barrels per day by 2026, which would double the average surplus observed earlier this year [6].