The crude oil market declined by over 1 per cent on Tuesday as the International Energy Agency (IEA) warned of a huge supply glut in 2026.
Brent crude futures fell by 93 cents or 1.5 per cent to settle at $62.39 a barrel and the US West Texas Intermediate (WTI) crude futures by 1.3 per cent or 79 cents to trade at $58.70 per barrel.
According to the IEA, the world oil market faces an even bigger surplus next year of as much as 4 million barrels per day as the Organisation of the Petroleum Exporting Countries and allies (OPEC+) and other producers lift output and demand remains sluggish.
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.
The Paris-based agency warned that global oil stocks are already soaring, especially oil stockpiled in tankers on water.
The IEA revised down its estimate of global oil demand growth to 700,000 barrels per day for both 2025 and 2026, down from 740,000 barrels per day expected for 2025 in the September report.
Its 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 barrels per day and 1.2 million barrels per day, 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.
At the same time, the IEA sees global oil supply on track to rise by 3 million barrels per day to 106.1 million barrels per day this year, and by another 2.4 million barrels per day next year. That’s higher than the September forecast of 2.7 million barrels per day supply growth for 2025 and 2.1 million barrels per day growth next year
The latest tensions between the US and China could also impact the market as China announced sanctions on Tuesday against five US-linked subsidiaries of South Korean shipbuilder Hanwha Ocean, while the two countries will begin charging additional port fees on ocean shipping firms.