The world is producing more oil than it can use and by next year there could be a glut of 4m excess barrels a day entering the market, according to the global energy watchdog.
The International Energy Agency said the surplus in 2026 was likely to be larger than previously forecast, despite a decision from the biggest oil producers to pause their plan to increase crude exports.
The Paris-based agency, which was set up after the 1973 oil crisis to monitor global supplies, pointed to a slower-than-usual growth in the world’s oil demand to explain the growing glut.
“Global oil market balances are looking increasingly lopsided, as world oil supply is forging ahead while oil demand growth remains modest by historical standards,” the IEA said.
The warning of a looming oversupply has emerged in the same week that the agency published its energy outlook report, including a controversial scenario in which global oil demand would continue to grow until 2050.
The model, which takes a conservative view of global climate action, was dropped in 2020 after the IEA was repeatedly criticised for underestimating the growth of renewable energy in its annual report.
The IEA returned the scenario to its outlook this year, as leaders gathered in Belém, in Brazil, for the Cop30 climate talks, after calls from the White House to present a more optimistic view for the future of oil. The IEA has denied it reintroduced its new scenario in response to pressure from the US.
Critics of the forecast believe it underestimates the pace of electric vehicle take-up, particularly in developing countries in Asia, a trend that is already helping to reduce the world’s demand for oil.
The IEA’s report also included two main scenarios in which oil consumption reached a peak by 2030 because of the strong take-up onof electric vehicles and renewable energy.
In all scenarios, renewable energy is expected to at least double over the next five years. The outlook suggested the world was likely to build more renewable energy projects in the next five years than had been rolled out over the past 40.
The Global Wind Energy Council (GWEC) said there was now “irreversible momentum towards the age of electricity”, which in every IEA scenario showed that renewable energy was “growing faster than any other major energy source”.
A GWEC spokesperson said: “It is important an outdated political narrative does not distract from this data-driven reality.”
In its monthly report the IEA said it now expected global oil supply to grow by about 3.1m barrels per day (bpd) in 2025, and by 2.5m next year, each up by about 100,000 bpd on the month.
With supply outpacing demand, the IEA’s latest monthly oil report suggested that by 2026 total oil supply would be 4.09m bpd higher than total demand, up from an implied surplus of 3.97m bpd in last month’s report.