Global oil prices have continued to decline, following a warning from the International Energy Agency (IEA) about a potential supply surplus in 2026. The IEA’s prediction has led investors to reassess the market, taking into account the possibility of increased production by OPEC+ producers and their competitors, as well as sluggish demand.
As of 07:40 AM WAT, Brent crude futures fell by 9 cents to $62.30 a barrel, while US West Texas Intermediate futures decreased by 3 cents to $58.67 a barrel. These prices represent a 0.14% and 0.05% decline, respectively. Both contracts had closed at five-month lows in the previous trading session.
The IEA’s forecast suggests that the global oil market may face a surplus of up to four million barrels per day in 2026, exceeding its earlier predictions. This anticipated surplus is attributed to increased output from OPEC+ producers and their rivals, combined with weak demand.
The ongoing trade tensions between the US and China have also contributed to the decline in oil prices. The recent imposition of additional port fees on ships carrying cargo between the two countries is expected to raise trading costs and disrupt freight flows, potentially lowering economic output. Furthermore, the escalation of tensions between the two nations, including China’s expansion of rare earth export controls and US President Donald Trump’s threat to increase tariffs on Chinese goods, has intensified concerns about the global economy.
Investors are awaiting weekly inventory data to gauge US demand. A preliminary Reuters poll suggests that US crude oil stockpiles are expected to have risen last week, while gasoline and distillate inventories likely fell. Analysts estimate that crude inventories increased by approximately 200,000 barrels in the week to October 10.
The decline in oil prices reflects the complex interplay between global supply and demand, as well as the impact of geopolitical tensions on the market. As the situation continues to evolve, investors will be closely monitoring developments to assess the potential consequences for the oil market and the global economy.