Record Oil Glut Looms as Saudi Led Opec Boosts Output Amid Slumping Demand

The global oil market is heading towards a historic oversupply in 2026, driven by aggressive production increases from the Saudi-led Opec+ bloc, as worldwide demand falters. The International Energy Agency (IEA) has warned that oil markets appear “ever more bloated,” with supplies set to outpace consumption by a significant margin over the next two years.

This week, the IEA slashed its growth forecast for oil demand in 2025 to just 680000 barrels per day – the weakest rate since the 2009 financial crisis, except for the anomaly of the pandemic. This lacklustre appetite for oil comes at a time when Opec is set to add an extra 2.5 million barrels per day in 2025, followed by another 1.9 million barrels in 2026. These figures are some 400000 to 600000 barrels per day higher than previously anticipated.

Most of the dampened demand is attributed to underwhelming consumption figures in China, India, and Brazil over recent months, forcing analysts to revise their expectations downward. The IEA described the situation as a “lacklustre demand across the major economies,” with little prospect of a dramatic rebound given subdued consumer confidence globally.

Oil inventories are projected to accumulate at a record pace, with estimates from Saxo Bank’s Ole Hansen indicating a build-up of 2.96 million barrels per day in 2026 – a rate exceeding even the pandemic year of 2020. The international oil benchmark, Brent crude, has responded accordingly, dropping by as much as 0.9 per cent in recent trading to below 66 dollars per barrel. Prices have already declined by around 10 per cent this year, after peaking at over 82 dollars per barrel in January.

Market watchers are also focusing on geopolitical developments, especially ahead of a scheduled meeting in Alaska between the US president and Russia’s Vladimir Putin. Should this signal an easing of tensions in Ukraine, analysts suggest this could place even further downward pressure on oil prices by reassuring investors of greater supply security.

The IEA now forecasts that the supply glut will continue to grow, peaking by the close of 2026. This prolonged surplus may keep energy prices subdued for the foreseeable future, reshaping the outlook for oil producers and investors alike.