The global oil market is anticipated to experience a marked surplus during the first quarter of 2026, as detailed in the latest monthly report by the International Energy Agency (IEA). The Paris-based organization, which advises developed nations, has estimated that supply will outpace demand by approximately 4.25 million barrels per day (bpd) in this period, representing roughly 4% of global consumption. This projected surplus surpasses previous estimates from other industry forecasts.
Oil prices have seen an increase of about 6% since the start of 2026, influenced primarily by ongoing concerns surrounding geopolitical instability and the potential for disruptions in oil markets. At 1142 GMT on a recent Wednesday, the benchmark Brent oil price was recorded at $65.02 per barrel, showing a modest gain of 10 cents for the day.
At the beginning of January, the United States detained Venezuelan President Nicolas Maduro and has encouraged oil companies to invest in Venezuela to enhance production capacity. However, in the short run, this political event has led to disturbances in Venezuelan oil output. Additionally, fears of possible U.S. military action against Iran have introduced further uncertainties regarding supplies. Operational disruptions, including drone assaults and technical faults, have also curtailed production levels in Kazakhstan.
Despite these geopolitical risks, the IEA suggests that unless there are significant further disruptions in key producer countries such as Iran and Venezuela, or additional production cuts from other oil-exporting nations, the large global surplus is expected to persist in the early months of 2026. The authority notes that the current elevated inventory levels help reassure market participants and have contributed to containing oil price fluctuations.
The main factor behind the expanding supply against demand is the accelerated production ramp-up by OPEC+—a coalition encompassing the Organization of the Petroleum Exporting Countries (OPEC), Russia, and allied producers—which began increasing output in April 2025 after extended periods of restriction. Other non-OPEC+ producers, including the United States, Guyana, and Brazil, have similarly boosted their production volumes. Nevertheless, OPEC+ has announced a pause in its production increase through the first quarter of 2026.
Looking at the entire year, the IEA’s current figures indicate an implied surplus of 3.69 million bpd, a downward revision from 3.84 million bpd in the previous month's report. This revision partly reflects an upward adjustment in the agency’s forecast for global oil demand growth by 70,000 bpd to an estimated 930,000 bpd. The adjustment is based on what the IEA describes as the normalization of economic conditions following trade tensions experienced in the previous year, along with oil prices remaining lower than in the previous year.
While the full impact of recent geopolitical developments on the oil market remains difficult to assess, the IEA has highlighted that the U.S. blockade on Venezuelan oil exports has reduced shipments by approximately 580,000 bpd from December into early January.
Seasonal factors also contribute to the expected surplus in the first quarter. As global refineries frequently undergo planned maintenance shutdowns during this period, their demand for crude oil temporarily declines. Consequently, the agency emphasizes the need for production reductions to adjust for this decrease in refining activity.
Rival forecaster OPEC offers a somewhat more optimistic outlook for demand, predicting growth of 1.38 million bpd this year. According to OPEC’s data, the market may approach equilibrium between supply and demand in 2026 rather than a significant surplus, as implied by the IEA’s analysis.
On the supply front, the IEA has updated its global production growth forecast for 2026 to 2.5 million bpd, up from approximately 2.4 million bpd indicated in December. Notably, it estimates that about 52% of this increase will come from countries outside the OPEC+ alliance.