IEA Lowers Oil Glut Expectations

Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)

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Summary

The International Energy Agency said a "relentless surge" in crude oil supplies has come to an end. There will still be a supply overhang next year, however.

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'Abrupt Halt' to Oversupply

Declines in production from non-OPEC countries such as the United States and Brazil led to a drop in global oil supplies, the International Energy Agency said in lowering its glut expectations.

The International Energy Agency (IEA) in its flagship oil market report cut its expectations for an oversupplied market for the first time since May. The agency in its report, published Thursday, said the "relentless surge in global oil supply came to an abrupt halt."

In November, the agency said global oil supplies were down some 1.5 million barrels per day (BBL/d) from levels two months prior. Over that period, it was OPEC+, a group consisting of the core members of the Organization of the Petroleum Exporting Countries and non-member state allies such as Russia, that accounted for 80% of the decline.

From OPEC+, it was sanctions targeting Russian and Venezuelan oil, along with unplanned outages in Kuwait and Kazakhstan, that led to the decline, the IEA found.

Last month, authorities reported damage to a berth at the Novorossiysk Refined Products & Chemicals Storage Terminal, which handles deliveries from the Caspian Pipeline Consortium (CPC). Kazakhstan, a major supplier to the network, said the attack was deliberate.

Subscribers to Industrial Info's Global Market Intelligence (GMI) Power Plant Database can learn more about the terminal in a detailed plant profile.

On Thursday, meanwhile, Industrial Info reported on the recent U.S. military seizure of a tanker carrying Venezuelan crude oil as bilateral tensions escalate. At the time, the oversupply situation muted the response in oil markets, analysts said.

October marked the high-water mark for global oil inventories, the IEA reported. Over the first 10 months of the year, stock builds averaged 1.2 million BBL/d, led in part by barrels on the water.

"Notably, crude oil on water has surged by 213 million barrels since end-August, as sanctioned barrels struggled to find buyers, record long-haul shipments from the Americas to Asia boosted volumes in transit and exports from OPEC+ members in the Middle East rose on higher quotas and seasonally weaker regional demand," IEA stated.

Oversupplies and weakened global demand, triggered in part by aggressive U.S. tariff policies, have held crude oil prices in check for much of the year.

But major supply-side pressures may be fading, the IEA found. From non-OPEC members, it was Brazil and the United States that added to the slip in inventories. In Brazil, production was curtailed last month due to platform outages offshore, while in the United States, lower crude oil prices could be leading to a reduction in output.

The U.S. federal government expects West Texas Intermediate, the U.S. benchmark for the price of oil, to average $65.32 per barrel this year and fall to $51.42 per barrel in 2026, below the point at which many shale drillers can make a profit.

In turn, total domestic crude oil production is expected to decline by around 1% to 13.53 million BBL/d, with all of the decline coming from the shale basins in the Lower 48 states.

Nevertheless, there will still be a supply overhang by next year, the IEA said. Global oil supplies should increase by 2.4 million BBL/d next year, while demand is expected to average 860,000 BBL/d, nearly 4% higher than 2025 levels.

WTI in pre-market action on Friday was holding steady relative to the previous session at around $57.50 per barrel.

By the Numbers

• 1.2 million barrels per day: average global stock builds during the first 10 months of 2025
• 80% of the decline in output came from OPEC+
• 213-million-barrel surge in oil on the water since end-August

Key Takeaways

• Glut expected, but levels lowered.
• U.S., Brazil led non-OPEC declines.
• Sanctions are taking a toll.

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