Global oil markets are on track for a record surplus next year as demand growth slows and supplies swell, the

International Energy Agency said. Oil inventories will accumulate at a rate of 2.96 million barrels a day, surpassing even the average buildup during the pandemic year of 2020, data from the IEA’s monthly report showed. World oil demand this year and next is growing at less than half the pace seen in 2023.

At the same time, supplies are booming. The OPEC+ coalition, led by Saudi Arabia, has fast-tracked the restart of halted production, and the IEA has slightly bolstered forecasts for output outside the group in 2026, led by the Americas.

“Oil-market balances look ever more bloated as forecast supply far eclipses demand towards year-end and in 2026,” the Paris-based agency said. “It is clear that something will have to give for the market to balance.”

Crude prices have declined roughly 12 per cent this year, trading near US$66 a barrel in London, as increasing supplies from both OPEC+ and its rivals coincide with deepening concern that

U.S. President Donald Trump ’s trade war will impact economic growth. The price retreat offers some relief for consumers after years of inflation, and a win for Trump as he pushes for lower fuel costs, but poses a financial threat for oil-producing companies and countries.

High stockpiles

Oil markets are drawing some support for the time being from strong summer demand for driving fuels, but the IEA’s data suggest they’re already tipping into oversupply. World oil inventories reached a 46-month high in June. New sanctions on Russia or Iran could still change the picture, the agency added.

On a quarterly basis, the surplus seen in 2020 would remain the biggest on record, peaking at more than 7 million barrels a day in the second quarter of that year as lockdown measures curtailed transportation and economic activity. That glut was subsequently pared by massive OPEC+ cutbacks.

Global oil consumption will grow by just 680,000 barrels a day this year, the weakest since 2019, amid disappointing demand in China, India and Brazil. It will expand by 700,000 a day in 2026, according to the report.

The IEA has predicted that world oil demand will stop growing by the end of this decade as countries shift away from fossil fuels toward

electric vehicles. The agency boosted forecasts for non-OPEC+ supply growth in 2026 by 100,000 barrels a day to 1 million a day, led again by the U.S., Guyana, Canada and Brazil.

As the Organization of the Petroleum Exporting Countries sees its rivals expand, the cartel and its partners are moving to wrest back their share of global oil sales.

Saudi Arabia has been steering the group to accelerate the revival of halted production in recent months, and earlier in August ratified another increase for September that will complete the restart of a 2.2 million-barrel tranche.

Whether or not the alliance continues to pursue market share is unclear. OPEC+ has signaled its next move is entirely undecided and could either be a further increase, a pause, or even a reversal of recent output additions.

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Output from the 22-nation group eased last month as the Saudis pared back a surge made in June during the Israel-Iran conflict, according to the IEA report.

Amid the overall pullback were still some gains, with the United Arab Emirates increasing production to 3.5 million barrels a day — a new high that’s significantly above its OPEC+ quota.