The global oil market may be at a tipping point as signs of a significant supply glut have become increasingly apparent, according to the October edition of the International Energy Agency’s monthly Oil Market Report.
For well over a year, the IEA Oil Market Reports have been highlighting that global trends were moving the world towards a considerable surplus of oil supply over demand. This has been borne out by the data, with the October report showing that the overall oil surplus averaged 1.9 million barrels per day from January through September 2025.
Recently, supplies from the Middle East and the Americas have surged, leading the amount of oil that is being transported or stored on the water to its highest level since the Covid-19 pandemic. Meanwhile, demand is set to remain tepid in 2025 and 2026, increasing by about 700 000 barrels per day in both years.
These trends point to an untenable surplus of nearly 4 million barrels per day in 2026 – making it increasingly clear that something in markets must give, as Toril Bosoni, head of the IEA’s Oil Industry and Markets Division, comments. The announcement last week of new sanctions on major Russian oil companies adds further complexity to the situation.
Highlights
• Global oil demand rose by 750 kb/d y-o-y in 3Q25, as petrochemical feedstocks led a rebound from 2Q25’s tariff-afflicted 420 kb/d pace. Still, oil use will remain subdued over the remainder of 2025 and in 2026, resulting in annual gains forecast at around 700 kb/d in both years. This is well below historical trend, as a harsher macro climate and transport electrification make for a sharp deceleration in oil consumption growth.
• Total global oil supply rose by 760 kb/d m-o-m, to 108 mb/d in September, as OPEC+ production surged by 1 mb/d led by the Middle East. World oil supply is on track to rise by 3 mb/d to 106.1 mb/d this year and 2.4 mb/d next year.
• Global crude runs will have reached a seasonal low of 81.6 mb/d in October, nearly 4 mb/d below July’s record level, as maintenance and escalating attacks on Russian infrastructure cut activity.
• Global observed inventories rose by a further 17.7 mb in August to a four-year high of 7 909 mb, as a 36.2 mb build in products was partly offset by an 18.5 mb decline in global crude, NGLs and feedstocks. OECD total inventories rose by 22 mb, non-OECD by 4 mb, supported by rising Chinese crude inventories.
• In calm trading, benchmark crude prices were little changed in September, as a looming supply surplus dampened the bullish impact of heightened Ukraine tensions and fresh sanctions against Russia and Iran.
Stocking up
The oil market has been in surplus since the start of 2025, but stock builds have so far been concentrated in crude in China and gas liquids in the United States. By September, however, a surge in Middle East production, coinciding with seasonally lower regional crude demand, boosted exports to two and a half-year highs. This, combined with robust flows from the Americas, swelled oil on water in September by a huge 102 mb, equivalent to 3.4 mb/d, the largest increase since the Covid-19 pandemic.
Global oil supply in September was up by 5.6 mb/d compared with a year ago. OPEC+ accounted for 3.1 mb/d of the increase, as the Group of 8 unwound 2 mb/d of production cuts, and as Libya, Venezuela and Nigeria all posted strong gains. Based on their latest agreement, OPEC+ is now on track to lift output by 1.4 mb/d on average this year and by a further 1.2 mb/d in 2026. Non-OPEC+ producers are set to add 1.6 mb/d and 1.2 mb/d, respectively, over the same timeframe. Risks to the forecast remain, with sanctions imposed on Russia and Iran compounding geopolitical concerns.
As for global oil demand, the third quarter of 2025 saw growth rebound to 750 kb/d y-o-y from the second quarter’s 420 kb/d pace, when consumption was weighed down by tariff turmoil, especially for LPG/ethane feedstocks that posted a rare contraction. Third-quarter gains are largely in line with our annual growth forecast of around 700 kb/d in both 2025 and 2026. Despite recent sluggish growth, the petrochemical sector will reassume its position in the driving seat of oil demand growth, as subpar economic conditions, increasing vehicle efficiencies and strong EV sales make for strong headwinds for road transport fuels.
Amid the backdrop of slower demand growth and a rapid increase in crude supplies, global oil balances have seen a 1.9 mb/d surplus since the start of the year, yet crude prices have fluctuated around $70/bbl so far in 2025.
