IEA Revises 2026 Oil Demand Upward as Production Declines, Challenging Glut Narrative

The International Energy Agency has raised its 2026 global oil demand growth forecast to 930,000 barrels per day, up from an estimated 850,000 bpd for 2025, citing a stronger economic rebound and low prices. The revision comes as global oil production fell by 350,000 bpd in December 2025 and was 1.6 million bpd below a September record, indicating a tightening supply picture. Despite a reported 470-million-barrel stock build in 2025 that has kept benchmarks about 16% lower year-on-year, the IEA now projects supply growth will slow in 2026 as demand strengthens. OPEC+ continues to dispute the glut narrative, with Aramco's CEO warning on January 26 that global spare capacity is a thin 2.5%, below the needed 3% minimum. The recent price spike following Kazakh production outages underscores market vulnerability to sudden supply shocks.