LONDON, Jan 21 (Reuters) – The global oil market will be in deep surplus in the first quarter of 2026, the International Energy Agency said on Wednesday, as so far excess supplies have offset the geopolitical risk of disruption.
The IEA, which advises industrialised countries, in its monthly oil report projected global oil supply would exceed demand by 4.25 million barrels per day in the first quarter. A surplus of that size would be about 4% of world demand and is larger than other predictions.
Reuters: January 21, 2026
Oil prices have risen about 6% since the start of the year, as concerns about geopolitics and possible oil market disruption drove buying. Global benchmark Brent was trading at $65.02 at 1142 GMT on Wednesday, up 10 cents on the day.
The U.S. captured Venezuelan President Nicolas Maduro at the start of the month and called on oil companies to invest in Venezuela to boost production, but in the short-term supplies from the country have been disrupted.
Threats of possible U.S. strikes on Iran have also raised the prospect of reduced supplies, and drone attacks and technical issues have reduced output in Kazakhstan.
“Barring any significant disruptions to supplies in Iran, Venezuela, or further cuts from other producers, a significant surplus is likely to re-emerge in the first quarter of 2026,” the IEA said.
“For now, bloated balances provide some comfort to market participants and have kept prices in check.”
OPEC+ HAS PAUSED AFTER SERIES OF SUPPLY HIKES
Supply has risen faster than demand mostly because OPEC+, or the Organization of the Petroleum Exporting Countries plus Russia and other allies, began boosting output in April 2025 after years of cuts. Other producers, such as the U.S., Guyana, and Brazil, have also increased production.
