Global Oil Market Braces for Record-Breaking Supply Glut by 2026

The global oil market is on course for what could become the largest supply glut in modern history by 2026. A potent mix of surging production and sluggish demand is weighing heavily on prices, unsettling both traders and investors. West Texas Intermediate (WTI) crude dropped to around $64.50 a barrel on Wednesday — its lowest in two months — following fresh forecasts from the International Energy Agency (IEA) and the US government that signaled record-high inventories ahead.

Weakest Demand Growth in Over a Decade

The IEA warns that oil markets are becoming “ever more bloated” as supply continues to outstrip demand. Growth in oil consumption for 2025 is now expected to slow to just 680,000 barrels per day (bpd) — the weakest since 2009 outside of the pandemic. By 2026, growth is projected at only 700,000 bpd, dampened by weaker economic activity and declining usage in major economies such as China, India, Brazil, and Egypt. Factors such as slower global growth, energy transition policies, and shifting consumer habits are all contributing to the slowdown.

Opec+ Ramps Up Output

Despite the weak demand outlook, Opec+, led by Saudi Arabia, is set to increase production by 2.5 million bpd this year and another 1.9 million bpd in 2026 — both higher than previous forecasts. This expansion is expected to push inventories to unprecedented levels, with stockpiles potentially growing by 2.96 million bpd next year, surpassing even pandemic-era highs.

Market Prices Under Pressure

Brent crude slipped 0.9% to below $66 a barrel on Wednesday, extending its year-to-date loss to about 10% after peaking above $82 in January. Without a strong rebound in global demand or coordinated output cuts, analysts warn that prices could remain under pressure well into 2026, impacting revenues for oil-exporting nations and investment in future energy projects.

Geopolitical Factors Add Uncertainty

Market watchers are also keeping an eye on geopolitical developments. The upcoming US–Russia summit on Ukraine follows Kyiv’s firm rejection of Moscow’s territorial demands, keeping uncertainty over sanctions on Russian oil high. Additionally, the expected meeting between US President Donald Trump and Russian President Vladimir Putin in Alaska on Friday could shift market sentiment. Any breakthrough toward ending the war in Ukraine could reduce geopolitical risk premiums, potentially pushing prices lower.

Looking Ahead

With Opec+ output rising, demand growth slowing, and geopolitical tensions influencing sentiment, the global oil market faces a challenging path ahead. Without a sharp improvement in the global economy or a strategic shift in production, 2026 may be remembered as the year the oil market saw its largest surplus in history — reshaping the balance of power and strategy in the energy sector.