World Oil Market Faces Larger 2026 Surplus: What This Means for Investors and Businesses in Oman
The global oil market is projected to face a significantly larger surplus in 2025, potentially reaching 4.09 million barrels per day (bpd), as OPEC+ producers and their rivals increase output while demand growth remains modest, the International Energy Agency (IEA) reported on Thursday.
The IEA highlighted in its November monthly report that “global oil market balances are looking increasingly lopsided,” with supply outpacing demand growth, which remains low by historical standards. The agency forecasts global oil supply to rise by approximately 3.1 million bpd in 2025 and by 2.5 million bpd in 2026, each figure revised upward by around 100,000 bpd from previous estimates.
This adjustment widens the IEA’s expected oil surplus for 2026 by 120,000 bpd, up from the previously indicated mismatch of 3.97 million bpd between supply and demand for next year. This short-term market outlook contrasts with the IEA’s annual outlook released the day before, which anticipates global oil and gas demand could continue to grow until 2050.
The report notes that global oil production in October was 6.2 million bpd higher than at the start of the year, with increases evenly split between OPEC+ and non-OPEC producers. Saudi Arabia accounted for 1.5 million bpd of this growth, while Russia’s output rose by only 120,000 bpd due to ongoing sanctions and Ukrainian attacks.
Despite the recent expansion of U.S. sanctions targeting Russian firms Rosneft and Lukoil—measures described by the IEA as potentially having a profound impact on global oil markets—Russian exports have largely continued without significant disruption.
The IEA also raised its forecast for oil demand growth by 80,000 bpd for 2025 and 70,000 bpd for 2026, attributing the increase to rising petrochemical feedstock requirements.
In contrast, OPEC forecasts a much tighter market balance next year, projecting a surplus of just 20,000 bpd, according to Reuters’ calculations based on OPEC’s own November oil market report.
The report further highlights a sharp surge in global oil inventories, which reached nearly 8 billion barrels in September—the highest level since July 2021. This rise was primarily driven by an 80 million barrel increase in waterborne oil storage. Preliminary data for October suggest that global stockpiles continued to grow, again fueled by higher waterborne oil volumes.
Overall, the IEA’s analysis signals growing tension in the oil market, with rapid supply increases outpacing modest demand growth, leading to an expanding surplus and rising stock levels.
Special Analysis by Omanet | Navigate Oman’s Market
The growing global oil surplus, driven by sustained high production from OPEC+ and non-OPEC producers amid slowing demand growth, signals potential downward pressure on oil prices in the short term. For Oman, this environment presents both a risk of reduced revenue from oil exports and an opportunity for strategic diversification into petrochemical sectors and other non-oil industries. Smart investors and entrepreneurs should consider capitalizing on rising petrochemical feedstock demand and preparing for longer-term market adjustments as global energy transition dynamics evolve.
