IEA's latest monthly report: Sanctions impacting supply, improving demand outlook, oversupply pressure on crude oil expected to ease by 2026.

In its latest monthly oil market report released on Thursday, the International Energy Agency (IEA) raised its global crude oil demand growth expectations for 2026 while lowering supply growth forecasts, predicting a slight narrowing of the market surplus next year. The Paris-based agency expects the global crude oil supply surplus in 2026 to be 384,000 barrels per day, down from the estimated 409,000 barrels per day in its November report. Based on improved macroeconomic prospects and the "basic disappearance of tariff-related concerns," the IEA simultaneously raised its global crude oil demand growth expectations for the next two years. The agency points out that the impact of sanctions on exports against Russia and Venezuela will slightly lower global crude oil supply growth rates for 2025-2026 from previous expectations. Meanwhile, the IEA believes that outside of China, there is limited refinery idle capacity in other regions, and amid the new round of sanctions imposed by the EU on Russian crude oil derivatives exports, the trend of a "parallel market" where ample crude oil supply coexists with a tight refined product market will continue for some time. Positive demand outlook The IEA has raised its forecast for oil demand growth in 2026 by 90,000 barrels per day to 860,000 barrels per day, while also increasing its demand growth forecast for 2025 by 40,000 barrels per day to 830,000 barrels per day. The agency stated, "Current oil prices and the US dollar exchange rate are nearing four-year lows, providing further support for next year's crude oil demand growth." The report also mentioned that in 2025, almost all of the growth in oil demand comes from non-OECD countries, whose energy demand is more sensitive to macroeconomic fundamentals. The IEA pointed out that previous tariff disputes had dragged down oil consumption, but a series of recent trade agreements reached by the US have helped restore market economic sentiment. Sanctions impact on the supply side The IEA expects global oil supply to increase by 2.4 million barrels per day next year, slightly lower than the previous forecast of 2.5 million barrels per day. Due to the disruptions from sanctions, the agency also lowered its expectations for OPEC+ crude oil production for 2025 and 2026. The report shows that global oil supply decreased by 610,000 barrels per day month-on-month in November due to declining production in sanctioned Russia and Venezuela. The IEA mentioned that Russian crude oil export revenue in November fell to its lowest level since the outbreak of the 2022 Russia-Ukraine conflict. On the other hand, with rising oil production in the Americas (US, Canada, Brazil, Guyana, and Argentina), the IEA maintains its supply expectations for non-OPEC+ oil-producing countries for the next two years unchanged.