The Imminent Oil Surplus: A 2026 Forecast

The International Energy Agency forecasts a deep oil market surplus in early 2026, with supply exceeding demand by 4.25 million barrels per day. Despite geopolitical risks, increased production from OPEC+ and other countries has led to oversupply. The U.S. actions in Venezuela and potential threats to Iran may impact supply stability.

The International Energy Agency (IEA) predicts a significant oil market surplus in the first quarter of 2026, forecasting supply will exceed demand by 4.25 million barrels per day. This surplus has already been driven by increased production from OPEC+ and allies, who initiated output hikes in April 2025.

Despite geopolitical challenges, such as the U.S. capture of Venezuelan President Nicolas Maduro and tensions with Iran, global oil prices have surged by 6% since the year's start. Brent crude, a global benchmark, saw a minor increase, trading at $65.02.

While OPEC+ halted its output hikes for early 2026, refinery maintenance season is expected to exacerbate the surplus. The IEA revised demand growth estimates, citing normalizing economic conditions. The actual impact of geopolitical developments on the oil market remains under evaluation.

(With inputs from agencies.)