IEA Expects Record Global Oil Oversupply in 2026 Amid Rising Production

The global oil market faces a significant oversupply in 2026, with the International Energy Agency (IEA) forecasting a surplus exceeding 3 million barrels per day despite strong demand growth. This surplus is driven by higher-than-expected oil production increases from both OPEC+ and non-OPEC countries, although OPEC+ production has not fully met announced targets, with some members operating at capacity limits. The oversupply has pressured oil prices downward, falling nearly 2% recently, although geopolitical tensions, such as conflicts involving Israel and potential Western sanctions on Russian energy, might prevent further declines. Contrasting with the IEA's outlook, OPEC expects a supply deficit due to its projections of robust demand and controlled supply increases. Additionally, the offshore rig construction market shows an oversupply with many rigs built on speculation and not yet contracted, indicating future capacity that may exacerbate supply issues. Despite strong demand growth forecasts, analysts like Goldman Sachs highlight the market's oversupply condition, signaling continued pressure on oil prices into next year.