The International Energy Agency (IEA) has revised its forecast for global oil demand growth in 2026, now projecting an increase of only 850,000 barrels per day (bpd) for this year. This is a decrease from the earlier estimate of 930,000 bpd announced last month. The IEA’s February Oil Market Report highlights that all of this growth is expected to originate from developing economies, with China at the forefront of the additional demand.
Petrochemical feedstock products are set to represent more than half of this year’s demand gains, a significant shift from previous years. In 2025, transport fuels dominated growth, accounting for roughly one-third of the increase. This adjustment emphasizes the changing dynamics in the oil market and the rising importance of petrochemical products.
The IEA’s outlook stands in stark contrast to that of the Organization of the Petroleum Exporting Countries (OPEC), which anticipates a much higher demand growth of 1.4 million bpd for 2026. OPEC reaffirmed this figure in its own monthly report released earlier this week, and it also expects a robust growth of 1.3 million bpd for 2027.
Oil Supply and Market Conditions
In its latest report, the IEA confirmed that the oil market is likely to face a surplus in 2026, with supply projected to increase by 2.4 million bpd, reaching 108.6 million bpd. This growth is anticipated to be evenly distributed between non-OPEC+ and OPEC+ producers.
The IEA had previously expected an increase in oil supply of 2.5 million bpd for this year but revised this estimate down due to significant disruptions caused by a winter storm in the United States and other factors affecting global supply chains. In January, the global oil supply fell by 1.2 million bpd to 106.6 million bpd as extreme winter weather disrupted operations across North America. Additionally, outages and export constraints from countries such as Kazakhstan, Russia, and Venezuela exacerbated the situation.
The IEA noted that world oil supply is set to recover in the coming months as production levels bounce back from January’s declines. The agency pointed out that the extreme weather forced the shut-in of over 1 million bpd of output in North America.
Compounding these issues were prolonged disruptions at Kazakhstan’s key export terminal since November, which were further complicated by a power outage at the country’s largest oilfield, the Tengiz oilfield, last month. These events have temporarily tightened the light crude markets in the Atlantic Basin, affecting pricing and availability.
As the global oil landscape continues to evolve, attention remains focused on the contrasting forecasts of the IEA and OPEC, highlighting the complexities inherent in predicting energy demand and supply dynamics. The situation underscores the influence of both geopolitical events and market trends on the global oil economy.
