Oil Market Oversupply in 2026: What This Means for Investors and Businesses in Oman
LONDON – The global oil market is projected to face a substantial surplus of up to 4 million barrels per day (bpd) in 2026, driven by increased production from OPEC+ members and other producers amid weak demand, the International Energy Agency (IEA) reported on Tuesday.
This latest forecast from the IEA, which advises industrialized nations, marks an increase from last month’s estimate of a 3.3 million bpd surplus for 2026. A surplus of this magnitude would represent nearly 4% of global demand and significantly exceed the projections of other market analysts.
OPEC+, comprising OPEC, Russia, and allied producers, is accelerating the rollback of previous output cuts, adding more crude oil to the market. This surge in supply is intensifying concerns about oversupply and exerting downward pressure on prices throughout the year.
According to the IEA, supply growth is outpacing demand by a wide margin. The agency now expects supply to increase by 3.0 million bpd in 2025, revised upward from 2.7 million bpd, followed by a further 2.4 million bpd increase in 2026.
Demand forecasts have been adjusted downward as well. The IEA lowered its 2025 global oil demand growth estimate to 710,000 bpd, a reduction of 30,000 bpd, citing a more challenging economic environment. The report noted, “Oil use will remain subdued over the remainder of 2025 and in 2026, with annual demand growth expected to be around 700,000 bpd in both years.”
This subdued consumption growth is influenced by a tougher macroeconomic climate and accelerating transport electrification, resulting in a sharp slowdown compared to historical trends. The IEA’s demand outlook is notably more conservative than that of some other forecasters, such as OPEC, as it anticipates a faster transition towards renewable energy sources.
In contrast, OPEC maintained its demand growth forecast at 1.3 million bpd for this year—nearly double the IEA’s projection—and expressed confidence in the global economy’s performance.
Oil prices reacted to these dynamics, with Brent crude trading just below $62 per barrel on Tuesday, up from a 2025 low near $58 in April.
The IEA highlighted that global oil supply in September increased by 5.6 million bpd compared to the previous year, with OPEC+ contributing 3.1 million bpd of the rise. It also pointed to a record increase in seaborne oil inventories, which climbed by 102 million barrels in September—the largest surge since the COVID-19 pandemic—partly driven by heightened production from the Middle East.
Besides OPEC+, the IEA expects supply growth from non-OPEC producers such as the United States, Canada, Brazil, and Guyana in the coming year.
Notably, the IEA’s projected surplus is much larger than other estimates. A Reuters poll of analysts in September indicated the market may face an oversupply of about 1.6 million bpd in 2026. Meanwhile, OPEC anticipates global supply and demand will be closely balanced next year, citing slower supply increases outside OPEC+ alongside stronger demand.
— Reuters
Special Analysis by Omanet | Navigate Oman’s Market
The International Energy Agency’s forecast of a significant oil surplus of up to 4 million barrels per day in 2026 signals potential downward pressure on global oil prices, posing challenges for Oman’s oil-dependent economy. Businesses should brace for price volatility and explore diversification opportunities beyond oil, while smart investors should consider positioning in renewable energy and sectors less vulnerable to oil market fluctuations, leveraging the accelerating energy transition trend highlighted by the IEA.
