RoydadNaft –  The International Energy Agency (IEA) has cut its forecast for the global oil surplus in 2026 for the first time since May, trimming it to 3.84 million barrels per day—a move driven by a brighter economic outlook boosting demand and sanctions curbing supply from Russia and Venezuela.

With Brent crude—down more than 15% in 2025—trading below $62 a barrel on Thursday, the Paris-based agency lowered the surplus projection by 250,000 bpd from November’s estimate. This still equates to about 4% of global demand and sits at the high end of analysts’ predictions.

Global supply has surged this year on output hikes from OPEC+, the U.S., and other producers, but the group has now paused increases for the first quarter of 2026. OPEC’s monthly report, released simultaneously, held its global demand growth forecast steady, suggesting supply and demand will closely align in 2026—contrasting the IEA’s outlook.

Oil Demand Rises as Tariff Fears Fade

The IEA boosted its global oil demand growth projection for 2026 to 860,000 bpd—up 90,000 bpd from last month—and raised the 2025 estimate by 40,000 bpd to 830,000 bpd. “Falling oil prices and the U.S. dollar, both near four-year lows, provide further tailwinds for next year’s demand,” the agency noted. Growth in 2025 has come almost entirely from non-OECD countries, which are more sensitive to macroeconomic shifts.

Recent U.S. trade deal breakthroughs have revived economic sentiment after early-year tariff tensions dented consumption.

Sanctions Cripple Russian, Venezuelan Output

The IEA now expects global supply growth in 2026 to hit 2.4 million bpd—100,000 bpd below prior forecasts—mainly due to sanction disruptions. OPEC+ production dropped 610,000 bpd in November, centered on Russia and Venezuela. Moscow’s export revenues hit their lowest since the 2022 Ukraine invasion.

Non-OPEC+ output forecasts remain unchanged, buoyed by gains in the Americas, including the U.S., Canada, Brazil, Guyana, and Argentina.

The agency warned that “parallel markets”—plentiful crude alongside tight fuels—will persist, exacerbated by limited spare refining capacity outside China and EU bans on Russian crude-derived fuel exports.