Global Oil Market Braces for Surplus Amid Tensions

The International Energy Agency forecasts a significant surplus in the global oil market for the coming year, primarily due to weaker demand forecasts from China. Though geopolitical tensions involving Iran pose concerns, the IEA assures sufficient emergency stocks. Concurrently, non-OPEC nations are increasing supply, outpacing demand growth.

In light of geopolitical tensions and fluctuating demand, the International Energy Agency (IEA) anticipates a substantial surplus in the global oil market for the new year. Recent price hikes stem from concerns over potential Israeli retaliation against Iran, a key oil exporter, but the IEA reassures markets of sufficient emergency stocks.

The Paris-based agency, which oversees industrialized countries' oil stockpiles, emphasized that public reserves exceed 1.2 billion barrels. Meanwhile, spare capacity within OPEC+—comprising OPEC members and allies such as Russia—remains historically high. However, the agency revised its global oil demand growth forecast, attributing the slowdown to weaker-than-expected demand from China.

The IEA reports that slow Chinese economic growth and the shift to electric vehicles are reshaping global demand patterns. It predicts an 860,000 barrels per day growth in oil demand this year, with a slight increase next year. Despite these dynamics, non-OPEC nations such as the U.S. and Brazil are ramping up supply, exceeding demand growth rates, thereby securing market stability.

(With inputs from agencies.)