IEA Slashes 2026 Oil Glut Forecast In Rare Warning As Demand Surges, Sanctions Hit Supply And Global Markets Brace For A Massive Shakeup - BP (NYSE:BP), Chevron (NYSE:CVX)

Core Viewpoint - The International Energy Agency (IEA) has revised its global oil surplus forecast for 2026 down to 3.84 million barrels per day (bpd) from 4.09 million bpd, citing stronger demand and weaker supply due to sanctions on certain countries [1]. Demand Outlook - The IEA has increased its global oil demand growth forecasts for 2025 and 2026, expecting an increase of 860,000 bpd in 2026, which is 90,000 bpd higher than the previous estimate. For 2025, the growth estimate was raised by 40,000 bpd to 830,000 bpd [4]. - The agency attributes the demand growth primarily to non-OECD economies, which are more closely tied to broader economic momentum. Recent improvements in U.S. trade agreements have also helped stabilize global sentiment [5]. Supply Expectations - The IEA has cut its supply growth forecasts for 2025-2026 due to tightened sanctions on Russia and Venezuela, now expecting global supply to rise by 2.4 million bpd next year, down from 2.5 million bpd [6]. - Supply from OPEC+ is anticipated to be lower than earlier estimates, with global supply having dropped by 610,000 bpd in November, primarily due to declines in Russia and Venezuela [7]. - Non-OECD+ producers, particularly in the Americas, are expected to continue ramping up output, with the IEA maintaining its supply outlook for these regions steady for both 2025 and 2026 [8]. Market Dynamics - The IEA noted a trend of "parallel markets," where crude supplies are abundant while refined fuel markets remain tight, likely to persist due to limited spare refining capacity outside China and ongoing EU sanctions on Russian fuel [9]. - OPEC's data suggests a broadly balanced global oil market in 2026, contrasting with the IEA's forecast of a significant surplus [10].