Oil Surplus Declines as IEA Cuts Its Forecasts

Oil surplus expectations have shifted as the International Energy Agency revised down its forecasts for global oversupply over the current and coming years, marking the first such cut in several months amid improving demand and slower supply growth.

The agency noted that the oil surplus projected for 2026 remains historically high, yet lower than previous estimates, reflecting downward revisions in production forecasts and stronger global consumption trends.

It added that the oil surplus outlook for 2025 was also reduced, supported by OPEC+ decisions to pause supply increases and slightly weaker output expectations from rival producers.

Demand-Supporting Factors

According to the IEA, improved macroeconomic conditions and recovering global trade have bolstered oil demand, particularly across major Asian economies, helping absorb excess supply.

Slower Global Supply Growth

The report also highlighted a significant slowdown in global supply growth during the current quarter, with notable production declines contributing to easing oversupply concerns and stabilizing oil markets.