International Energy Agency Forecasts Oil Surplus in Q4 2026 as Supplies Recover

Key Facts

The International Energy Agency said in its report dated November 13, 2026, that the global oil market would return to surplus in the fourth quarter of 2026, with inventories building more sharply in 2027. The forecast follows a recovery in supplies, particularly Gulf exports, as estimates for demand this year decline. The agency wrote that "November supply and demand balances indicate that the global oil market will return to surplus in the fourth quarter of 2026." It forecast global oil demand to fall by 2.7 million barrels per day in 2026 to 102.3 million barrels per day. Demand is then expected to recover by 2 million barrels per day in 2027, while supply is expected to rise next year.

Global supply rose by 2.3 million barrels per day in October to 105.4 million barrels per day, following an increase of 3 million barrels per day in September. The agency said the increase came despite continued attacks on energy facilities and tankers, driven by higher Gulf exports. Oil exports from the Gulf, excluding Oman, reached 18.4 million barrels per day in October, but remained 26% below pre-war levels. The increase was led by crude flows, which rose to 15 million barrels per day, equivalent to 82% of pre-war levels. The agency raised its fourth-quarter 2026 supply estimate by 3.3 million barrels per day after production increased by 5.3 million barrels per day since August.

The agency forecast supply to decline by 4.8 million barrels per day in 2026, before rising by 6.6 million in 2027 to an average of 108.1 million barrels per day. Meanwhile, the annual decline in demand is slowing to 2.7 million barrels per day in the fourth quarter, compared with an average of 4.4 million in the second and third quarters. The October report had estimated that demand would fall by 2.6 million barrels per day on average in 2026, and decline by 2.5 million year on year in the fourth quarter. At the time, the agency still expected a partial recovery in demand of 2 million barrels per day in 2027, a forecast it maintained in its November estimates. Improving supplies and continued weak demand are thus combining to shape expectations of a return to surplus.

Inventory data showed a divergence between the overall increase and a decline in onshore stocks. Observed oil inventories rose by 52 million barrels, or 1.7 million barrels per day, in October, marking their first increase since June. Oil in transit by sea rose by 86 million barrels to its highest level since January, while OECD inventories fell by 47 million barrels. Onshore inventories remained at their lowest levels since at least 2016. The agency said observed global inventories had fallen cumulatively by 462 million barrels from the start of the war through October.

Global refinery processing fell by 1.3 million barrels per day month on month to 81.3 million in October, a seasonal low. The agency expects processing to rise to 84.7 million barrels per day in December, then increase by 2.5 million in 2027 to 84.3 million. The expected recovery follows an average annual decline of 2.2 million barrels per day in 2026. But the agency said tight product supplies, particularly diesel, remain the main concern. It also warned that attacks on shipping threaten the security of navigation needed to sustain the recovery in supplies, and noted that the release of emergency diesel inventories in the coming months would provide a temporary bridge until refining and production recover.

In separate forecasts released on November 10, the U.S. Energy Information Administration said Brent could remain near $100 per barrel in November and December, as global inventories build at a rate of 3.5 million barrels per day in the first half of 2027. That could push the price below $90 in the second quarter of 2027, according to the administration, which scheduled its next forecast for December 8. Brent closed at $95.82 per barrel on November 12, according to EL7 data. The administration had estimated the average spot price of Brent at $124 per barrel in October, up $10 from September, before it fell below $100 on November 4. It also forecast the average Brent price to decline to $77 in the fourth quarter of 2027 as inventories build during the year.