Global oil markets are bracing for a substantial supply glut in 2026, with forecasts indicating Brent crude averaging $56 per barrel and West Texas Intermediate (WTI) near $49. This outlook, dubbed the 'great surplus', stems from a fundamental imbalance where supply is projected to outpace demand growth significantly.
Supply Surge vs. Demand Growth
Global oil production is expected to climb by 1.4 to 2.1 million barrels per day (mbpd) in 2026. The Americas, particularly the United States, Brazil, and Guyana, continue to set records. Simultaneously, OPEC+ nations, after adding 3% to global output in 2025, are signaling a strategic shift towards reclaiming market share rather than defending price floors through production cuts. This strategy aims to secure long-term survival for the cartel, especially with the US controlling Venezuelan oil assets.
China's Strategic Stockpiling
Demand for oil, while projected to grow by 1.1 to 1.3 mbpd in 2026, is not keeping pace with supply increases. Growth is increasingly reliant on petrochemical feedstocks and aviation, a slower pace than traditional road transport. Nevertheless, China, the world's largest crude consumer, imported 11.55 million bpd in 2025, a 4.4% increase year-on-year. The nation has been aggressively refilling strategic reserves, reportedly holding 1.2 to 1.4 billion barrels by end-2025, enough for three months of cover if imports were disrupted.
US Inventory Dynamics
US crude inventories stand at 422 million barrels, down 3% from the five-year average. However, gasoline stocks saw a significant jump of 9 million barrels last week, while production, though lower seasonally at 13.71 mbpd, is expected to remain resilient due to efficiency gains and energy solutions for data centers.