Global Oil Market: Demand and Supply Imbalance Threatens Price Stability Due to Rapid Output Growth
The global oil market is once again showing signs of developing an imbalance between demand and supply, which could lead to substantial drops in oil prices.
According to the International Energy Agency (IEA), in 2026, worldwide oil reserves are expected to increase by roughly 3 million barrels per day, a pace that surpasses the average rate seen at the onset of the COVID-19 pandemic in 2020 when global energy markets were under severe stress.
Experts point out that this trend is primarily driven by sluggish demand amid economic sluggishness in major countries like China, India, and Brazil, combined with a rapid ramp-up in oil extraction.
Forecasts suggest that in 2023, demand will grow by only 680,000 barrels per day — the smallest increase since 2019, influenced by economic deceleration.
For subsequent years, demand growth is projected to stay around 700,000 barrels daily, while production continues to accelerate, fueled by actions from OPEC+ and independent producers.
Saudi Arabia has already begun lifting production restrictions, planning to increase quotas by 2.2 million barrels per day by September, thereby boosting global supply.
Additionally, non-cartel countries have ramped up their output, collectively adding about 1 million barrels daily to the market.
The United Arab Emirates has increased production to 3.5 million barrels per day, exceeding their official quotas.
Meanwhile, seasonal factors positively influence fuel demand, especially during travel seasons.
As of August, Brent crude oil trades around $66 per barrel, reflecting a 12% decline from the start of the year, amid fears over the impact of US trade conflicts on the world economy.
IEA analysts warn that market conditions will require adjustments — otherwise, the ongoing imbalance could cause a sharp decline in oil prices, risking further market instability.