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Global oil production is expected to outpace demand in the fourth quarter of 2026, signalling a shift towards market surplus as recovering exports from the Gulf help ease supply constraints, according to the International Energy Agency (IEA).
In its latest Oil Market Report, the IEA projected global oil supply to average 105 million barrels per day (mb/d) during the final quarter of the year, exceeding anticipated demand by approximately 1.7 mb/d.
The recovery follows increased oil shipments from the Gulf, despite continued security risks affecting maritime trade through the Strait of Hormuz. Gulf exports, excluding Oman, reached 18.4 mb/d in October, although volumes remained 26% below pre-war levels.
Global oil supply climbed by 2.3 mb/d in October to reach 105.4 mb/d, following an increase of 3 mb/d in September. The improvement has contributed to easing crude oil prices and restoring some balance to international energy markets.
Meanwhile, the IEA forecasts global oil demand to decline by 2.7 mb/d in 2026 to 102.3 mb/d, reflecting the impact of elevated fuel prices, supply disruptions and accelerating improvements in energy efficiency.
Despite the improving crude supply outlook, refined petroleum products remain under pressure. Diesel markets continue to face significant constraints due to disruptions affecting Middle Eastern and Russian refining infrastructure.
Looking ahead, global oil demand is projected to recover by 2 mb/d in 2027, while supply is expected to increase by 6.6 mb/d, potentially creating a larger market surplus.
The IEA cautioned that ongoing geopolitical tensions and maritime security risks could continue to influence oil supply, pricing and global market stability.
Global oil supply to surpass demand in fourth quarter: IEA - Oman Observer
