The world is heading toward a historic oil oversupply, according to the International Energy Agency (IEA). Global production is expected to outpace demand by nearly 4 million barrels per day next year, marking the largest annual surplus ever recorded. The excess is already visible, with oil stockpiling on tankers at sea reaching the highest levels in years.
The IEA says the glut has grown 18% larger than previously forecast, driven by OPEC+ boosting production and strong output from non-OPEC producers like the U.S., Brazil, Canada, Guyana, and Argentina.
So far, prices have been shielded as China absorbed much of this year’s buildup, but that buffer is fading as more Middle Eastern crude heads to market. Once those barrels reach onshore storage, inventories could surge sharply.
Global oil demand growth is losing steam — rising only 700,000 barrels a day this year and next, far below historical norms. The slowdown reflects weaker economic activity, trade tensions, and the shift toward electric vehicles.
At the same time, non-OPEC+ output will grow roughly twice as fast as demand, setting up the market for persistent oversupply. Brent crude has already slipped to around $63 per barrel, down 15% this year.
The IEA notes that much of the surplus is in natural gas liquids (NGLs) used in petrochemicals, which has softened the impact on crude prices. Still, as supply growth continues and demand cools, the agency warns that 2026 could see the biggest oil glut in history — rivaling the excesses seen during the height of the 2020 pandemic.
