The International Energy Agency (IEA) is forecasting an unprecedented oversupply in the global oil market next year. Within a month, the agency raised its surplus estimate by 18%, citing increased production by both OPEC+ members and other oil producers. For Russia, this poses the risk of significant budget losses.
The substantial surplus already accumulated this year is expected to reach 4 million barrels per day in 2026 — nearly 4% of global demand. The agency highlights potential risks to this forecast, including sanctions against Russia and Iran and escalating geopolitical tensions. Meanwhile, the growing surplus has already begun to weaken oil prices since September, despite expectations of intensified conflict in Ukraine and new sanctions against Russia and Iran.
The effect became stronger in October following the agreement on a peaceful resolution in the Gaza Strip. While Brent crude prices hovered between $65–70 per barrel in September, they fell by 2.2% to $61.9 on Tuesday. This drop presents serious risks for Russia’s budget, about 40% of which is allocated to the war and security forces.
The average price of Urals crude in September was $56.82 per barrel. The benchmark price used to calculate Russia’s oil and gas revenues eligible for budget spending is $60 per barrel this year, with the government projecting $59 per barrel for 2026. However, ING analysts forecast an average Brent price of $57 next year, citing “a significant surplus forming in Q4 that will persist through 2026.”
Given that the Urals discount to Brent exceeds $10 per barrel, the average price of Russian crude next year could fall well below $50.
According to the IEA, oil demand growth is slowing due to worsening economic conditions — driven largely by new U.S. import tariffs — and the accelerating transition to electric vehicles, which reduces demand for transport fuels. Demand is expected to rise by 700,000 barrels per day both this year and next, far below historical trends, reaching 104.5 million barrels per day.
At the same time, average daily production is projected to increase by 3 million barrels this year and another 2.4 million barrels in 2026, reaching 108.5 million barrels per day.
According to the IEA, OPEC+ countries will add 1.4 million and 1.2 million barrels per day in 2025 and 2026, respectively, while other producers — including the U.S., Brazil, Canada, Guyana, and Argentina — will contribute 1.6 million and 1.2 million barrels per day.
One of the key indicators of the market’s oversupply, the IEA notes, is the increase in oil stored on tankers at sea, which rose by 102 million barrels in September — equivalent to 3.3 million barrels per day — marking the largest build-up since the COVID-19 pandemic.
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