Amid soaring supply and subdued demand, the expected global oil oversupply will be larger than previously anticipated, the International Energy Agency (IEA) said on Tuesday.
In its monthly report, the agency today trimmed its oil demand growth estimate for this year and next and hiked the expected supply growth, which will result in a record supply overhang. Global oil stocks are already soaring, especially oil stockpiled in tankers on water, the IEA warned.
The IEA revised down its estimate of global oil demand growth to 700,000 barrels per day (bpd) for both 2025 and 2026, down from 740,000 bpd expected for 2025 in the September report.
The agency’s latest estimate is nearly half the demand growth expected by OPEC, which on Monday kept unchanged its 2025 and 2026 oil demand growth forecasts at 1.3 million bpd and 1.2 million bpd, respectively.
Despite an uptick in demand in the third quarter compared to the same period last year, “oil use will remain subdued over the remainder of 2025 and in 2026, resulting in annual gains forecast at around 700 kb/d in both years,” the IEA said in its October report.
“This is well below historical trend, as a harsher macro climate and transport electrification make for a sharp deceleration in oil consumption growth,” the agency noted.
At the same time, the IEA sees global oil supply on track to rise by 3 million bpd to 106.1 million bpd this year, and by another 2.4 million bpd next year.
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That’s higher than the September forecast of 2.7 million bpd supply growth for 2025 and 2.1 million bpd growth next year.
Global observed inventories rose by a further 17.7 million barrels in August 2025 to a four-year high of 7,909 million barrels. Preliminary data for September show sharply higher oil stocks, led by a huge build in oil on water, the IEA said today.
Soaring Middle East supply, combined with robust flows from the Americas, swelled oil on water in September by a massive 102 million barrels, equivalent to 3.4 million bpd, which is the largest increase since the pandemic, the agency said.
“Looking ahead, as the significant volumes of crude oil on water move onshore to major oil hubs, crude stocks look set to surge while NGLs start to drop,” the IEA said.
By Michael Kern for Oilprice.com
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