Global oil supply to exceed demand in late 2026 according to IEA

Global oil supply is projected to exceed global demand in the fourth quarter of 2026, according to the International Energy Agency. This forecasted surplus represents the first instance of supply outstripping demand since the conflict involving the United States, Israel, and Iran began in late February 2026. The International Energy Agency stated that the oil market is showing tentative signs of rebalancing, with global oil supplies surpassing demand for the first time since the outbreak of the war in Iran.

Rising supply and shifting demand

Global oil supply increased by 2.3 million barrels per day in October 2026, reaching a total of 105.4 million barrels per day. While supply is rising, global oil demand is projected to decrease by 2.7 million barrels per day in 2026 to a total of 102.3 million barrels per day. Looking further ahead, the International Energy Agency expects global oil demand to rebound by 2 million barrels per day in 2027.

The "American quintet"—comprising the United States, Canada, Brazil, Argentina, and Guyana—is expected to increase oil extraction by 1.6 million barrels per day during 2026. Meanwhile, oil exports from Gulf countries, excluding Oman, reached 18.4 million barrels per day in October 2026. This figure is 26% below pre-war levels.

Global stock fluctuations

Monitored global oil stocks increased by 52 million barrels in October 2026, which marks the first monthly increase since June 2026. At-sea oil volumes also increased by 86 million barrels in October 2026, driven by rising exports from the Gulf. Conversely, OECD oil stocks decreased by 47 million barrels in October 2026. This reduction in OECD stocks includes a 41 million barrel decrease in United States oil stocks during the same month.

Diesel price concerns

Despite the projected surplus in total oil supply, the International Energy Agency noted that severe tightness in product supply remains a primary concern for the market and consumers. Specifically, diesel prices were recorded at $180 per barrel in October 2026. This price level is approximately 77% higher than pre-war levels. The International Energy Agency stated that the severe tightness in product supply, especially for diesel, remains the overriding concern of the broader market and consumers.

Glossary

• Gulf countries — These are countries located in the Persian Gulf region. They are investors in various sectors and are responsible for significant oil exports.