LONDON: World oil demand will rise more slowly than expected this year, the International Energy Agency said on Thursday, while warning the global market still faces a sizeable surplus despite outages that cut supply in January.
In its monthly oil report, the agency projected that global supply would exceed demand by 3.73 million barrels per day in 2026, broadly unchanged from last month. A surplus of that scale would equal almost 4% of world demand and is larger than other forecasts.
Global benchmark Brent crude LCOc1 was trading below $70 a barrel on Thursday, edging lower after the report. Prices are still up about 14% since the start of the year on tensions between the US and Iran and supply outages across several producers.
“Escalating geopolitical tensions, snowstorms and extreme temperatures in North America, and Kazakh supply disruptions sparked the reversal to a bullish market,” said the IEA, which advises industrialised countries.
World oil demand is set to rise by 850,000 bpd this year, the IEA said, down 80,000 bpd from last month’s forecast and well below Wednesday’s projection from producer group OPEC.
The IEA said “economic uncertainties and higher oil prices” were weighing on consumption.
Supply has risen faster than demand largely because OPEC+ - the Organization of the Petroleum Exporting Countries plus Russia and other allies - began increasing output in April 2025 after years of cuts. Other producers, such as the US, Guyana, and Brazil, have also lifted production.
OPEC+ has, however, paused its output hikes for the first quarter of 2026. Eight members will meet on March 1 when they are expected to decide whether to resume the hikes in April.
Global oil supply plunged by 1.2 million bpd in January to 106.6 million bpd after the outages in Kazakhstan and elsewhere, the IEA said.
With supply cut at the start of the year, the agency trimmed its projection for 2026 supply growth to 2.4 million bpd from 2.5 million bpd last month.
OPEC+ pumped 43.3 million bpd of crude in January, down 160,000 bpd from December, the IEA said.