Forecasts of a massive oil glut are seriously exaggerated as demand keeps rising and global stocks are below the five-year average, according to Saudi Aramco’s chief executive officer, Amin ?Nasser.
“Oil glut predictions are seriously exaggerated,” Nasser said on the sidelines of the World Economic Forum in Davos, Switzerland, as carried by Reuters.
Global oil stocks are low, while the amassed barrels in floating storage on tankers are mostly sanctioned supplies, the CEO of the world’s biggest oil firm and top crude exporter said.
Moreover, spare capacity has dwindled over the past year, also limiting potential efforts to boost output in case of major supply disruptions, according to Nasser.
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“It (spare capacity) is at 2.5% and we need a minimum of 3%. If OPEC+ further unwinds cuts, spare capacity will fall even further ?and we will need to watch this very carefully,” Aramco’s top executive said.
The market is oversupplied, analysts say, as reflected in only brief spikes in oil prices in recent weeks driven the geopolitical developments.
Most investment banks and the EIA forecast that average oil prices will be below $60 per barrel in 2026 due to an emerging and persistent market oversupply, especially during the first half of the year.
But OPEC, led by Saudi Arabia, insists that the market would be balanced as demand growth is robust and will remain such in 2027, too.
The International Energy Agency (IEA) this week raised its oil demand growth estimate and expects growth at 930,000 barrels per day (bpd) in 2026, up by 70,000 bpd from last month’s assessment.
The upgrade reflects a recovery in feedstock demand in the petrochemicals industry, on top of expectations of normalized economic conditions after the unpredictable and chaotic tariff policy of the Trump Administration last year.
But the market continues to be oversupplied, the Paris-based agency noted.
“Indeed, benchmark crude oil prices remain $16/bbl lower than a year ago, reflecting the large global supply surplus that built up over the past 12 months, in line with our forecasts,” the IEA said.
By Tsvetana Paraskova for Oilprice.com
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