IEA lifts oil demand forecast but warns surplus will persist in 2026

The International Energy Agency (IEA) has raised its forecast for global oil demand growth for 2026, adjusting it from 860,000 to 930,000 barrels per day due to a more favorable economic outlook and lower crude prices. However, it simultaneously cautioned that supply growth, projected at 2.5 million bpd, will continue to outstrip demand, leaving the market structurally oversupplied. Despite a decrease in supply by 350,000 bpd in December, the surplus remains largely intact, driven by increased inventories and ongoing geopolitical risks. The near-term balance appears fragile, especially with upcoming seasonal refinery maintenance that could soften demand further. Unless producers opt for additional supply restraint, the chances of significant oversupply re-emerging increase, posing challenges for the oil market's recovery.