The International Energy Agency (IEA) has issued a stark warning about a potential global oil surplus, projecting a significant imbalance between supply and demand by 2026. In its October Oil Market Report, the agency revised its supply growth estimates upward, forecasting an increase of 3.0 million barrels per day (bpd) in 2025, up from the previous 2.7 million bpd. This is expected to be followed by a further 2.4 million bpd rise in 2026. Meanwhile, demand growth is anticipated to remain sluggish, with the IEA trimming its 2025 estimate to 710,000 bpd and predicting a modest 700,000 bpd increase in 2026. This marks a sharp deceleration in oil consumption, attributed to macroeconomic challenges and the accelerating shift toward electrification in transportation. The IEA predicts that global supply could exceed demand by as much as 4 million bpd in 2026, a significant jump from its earlier forecast of a 3.3 million bpd surplus. This potential glut is driven by aggressive production increases from OPEC+ and non-OPEC+ producers, including the US, Canada, Brazil, and Guyana. In contrast, OPEC maintains a more optimistic outlook, expecting supply and demand to balance in 2026 due to stronger global consumption. Price forecasts reflect the uncertainty, with analysts predicting Brent crude to average $67.61 per barrel in 2025, while Barclays and Goldman Sachs have revised their projections downward, citing supply pressures. Despite the near-term challenges, some industry leaders anticipate a medium-term rebalancing as higher-cost producers reduce output. The IEA’s warning underscores the growing tension between production ambitions and the realities of the global energy transition.