OPEC maintains expectations for strong growth in oil demand, challenging the narrative of "oversupply."

The Organization of the Petroleum Exporting Countries (OPEC) did not make any adjustments to its relatively strong global oil demand growth forecasts for this year and next in its monthly report released on Thursday, and indicated that the global economy is maintaining a steady growth trend in the second half of this year. In contrast, the International Energy Agency (IEA) stated on Thursday that global oil supply growth will be faster than expected this year as OPEC+ members further increase output and non-OPEC+ countries increase supply, hinting at a possible oversupply by 2026. OPEC's optimism in this latest monthly report comes after the oil-producing alliance "OPEC+" which includes more member countries decided to increase production on Sunday, raising oil output quotas since October in order to reclaim market share from U.S. shale oil producers, with Saudi Arabia leading the charge. "The strong global economic growth that has been evident in the first half of 2025 has carried on into the second half of the year," OPEC stated in the report. The report also showed that OPEC+ increased crude oil production by 509,000 barrels per day in August, reflecting its earlier decision to increase production quotas for refined oil. As OPEC, Russia, and other allies decided to unwind the second round of production cuts faster than initially planned, OPEC+ is putting more crude oil into the market. The additional supply has raised concerns of oversupply and put pressure on oil prices this year. According to the IEA, supply growth is outpacing demand although the agency increased its global demand growth forecast by 74,000 barrels per day to 740,000 barrels per day this year, citing resilience in advanced economies. The IEA stated in the report: "A range of forces pulling the oil market in different directions, OPEC+ supplies adding up and the prospects of an increasingly bloated oil balance offer a hedge in the background of possible supply losses from sanctions on Russia and Iran." The IEA's demand forecast is at the lower end of the industry range because the agency expects the transition to renewable energy to happen faster than some other forecasters anticipate. Is the looming oil oversupply of 2026 about to become a reality? Since the beginning of this year, the IEA has been forecasting an oil oversupply in 2026, with the report on Thursday stating that global inventories will increase by an "unsustainable" 2.5 million barrels per day on average in the second half of 2025 as supply significantly outstrips demand. The report suggests that next year, supply may exceed demand by around 3.3 million barrels per day, as the growth in supply from OPEC+ and non-OPEC+ producers such as the U.S., Canada, Brazil, and Guyana outpaces limited demand expansion. The previous month's report hinted at an oversupply of nearly 3 million barrels per day by 2026. Expectations of a significant oversupply in the global oil market have been growing this year. A recent research report by the Wall Street financial giant Goldman Sachs pointed out that, due to the worsening oversupply in the global oil market, Brent crude oil futures prices may fall below $50 per barrel by the end of 2026. In comparison, Brent crude oil is currently hovering around $65 per barrel. Overall, the IEA puts more emphasis on factors such as efficiency improvements, electrification, weak OECD oil consumption, and other medium-term suppressing factors, therefore taking a more cautious approach to demand growth; while OPEC is more optimistic about air travel and emerging market travel/petrochemicals, believing that high demand growth is sustainable.