The International Energy Agency (IEA) has revised its global oil demand growth forecast upward for 2026 while lowering supply growth projections in its latest monthly oil market report released Thursday. The Paris-based agency now expects the global oil surplus to narrow slightly next year.
The IEA projects a global oil supply surplus of 3.84 million barrels per day (bpd) in 2026, down from its November estimate of 4.09 million bpd. The agency cited improving macroeconomic conditions and the easing of tariff-related concerns as key factors behind its upward revision of oil demand growth forecasts for both 2025 and 2026.
Supply constraints are expected due to sanctions impacting exports from Russia and Venezuela, leading to slightly lower global oil supply growth in 2025-2026 than previously anticipated. The IEA noted that tight refining capacity outside China, combined with new EU sanctions on Russian oil-derived fuel exports, will likely sustain the current market dynamic of ample crude supply alongside tight refined product markets.
**Improved Demand Outlook** The IEA raised its 2026 oil demand growth forecast by 90,000 bpd to 860,000 bpd, while increasing its 2025 projection by 40,000 bpd to 830,000 bpd. The agency stated, "Current oil prices and the US dollar exchange rate are both near four-year lows, which should further support demand growth next year."
Nearly all demand growth in 2025 is expected to come from non-OECD countries, whose energy consumption remains more sensitive to macroeconomic fundamentals. The IEA highlighted that recent US trade agreements have helped stabilize market sentiment following earlier tariff disputes that had weighed on oil consumption.
**Sanctions Disrupt Supply** Global oil supply is now projected to increase by 2.4 million bpd in 2025, down from the previous estimate of 2.5 million bpd. The IEA also lowered its production forecasts for OPEC+ in both 2025 and 2026 due to sanction-related disruptions.
November saw global oil supply decline by 610,000 bpd month-on-month, primarily due to reduced output from sanctioned nations Russia and Venezuela. The IEA noted that Russia's oil export revenues in November fell to their lowest level since the full-scale outbreak of the Russia-Ukraine conflict in 2022.
Meanwhile, rising production in the Americas (including the US, Canada, Brazil, Guyana, and Argentina) has led the IEA to maintain unchanged supply forecasts for non-OPEC+ producers in both 2025 and 2026.