Global oil demand will grow more slowly than previously expected this year, the International Energy Agency (IEA) said, while forecasting that the global market will continue to face a sizable surplus despite supply cuts that reduced output in January.
The IEA, which advises industrialized countries, said in its monthly oil report that global supply is expected to exceed demand by 3.73 million barrels per day in 2026, a figure similar to last month’s projection. A surplus of that magnitude would represent around 4% of global demand and is larger than other forecasts.
Oil prices have risen about 14% since the start of the year due to tensions between the United States and Iran and as supply disruptions in several producing countries have curbed output. The global benchmark Brent was trading near $70 per barrel on Thursday.
“The escalation of geopolitical tensions, snowstorms and extreme temperatures in North America, as well as supply disruptions in Kazakhstan, have driven the shift to a bullish market,” the IEA said in the report.
Global oil demand is set to increase by 850,000 barrels per day this year, according to the IEA, down 80,000 barrels per day from last month’s forecast and well below Wednesday’s projection from producer group OPEC.
Referring to the lower demand growth outlook, the IEA said that “economic uncertainty and higher oil prices” are weighing on consumption.
Supply has risen faster than demand, mainly because OPEC+, the Organization of the Petroleum Exporting Countries plus Russia and other allies, began increasing production in April 2025 after years of cuts. Other producers, including the United States, Guyana and Brazil, have also boosted output.
The IEA lowered its forecast for global oil supply growth this year to 2.4 million barrels per day, from 2.5 million last month, although this remains significantly faster than the pace of demand growth.
