Sopuruchi Onwuka

Supply of crude oil in the global petroleum market is on the rise by 370,000 barrels per day (370kbd) significant 2.5 million barrels per day (2.5 mbd) in 2025, stoking the fears of oversupply and pull on prices already ruling sentiments in the market.

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Latest report by Rystad Energy stated that growth in supply will not abate in 2026 when output is also expected to rise by 620 kbd to 1,9 mbd.

The figures appears to confirm predictions by the International Energy Agency (IEA) and the Energy Information Administration (EIA) of the United States that mild glut in the market would translate to weaker prices and thin margins for players in the high cost unconventional terrains.

However, Rystad noted that the market has absorbed the additional barrels as refinery activity reached an all-time high, and China boosted stock holdings.

According to industry analysis released by Rystad Energy at the weekend, global oil supply was up after the eight OPEC+ members subject to voluntary output reductions agreed on 3 August to raise production by another 547 kb/d in September, fully unwinding the 2.2 mb/d cuts agreed to in November 2023 since April.

“OPEC+ crude and NGLs will now account for 1.1 mb/d of supply growth this year and 890 kb/d in 2026. Despite the significant OPEC+ gains, non-OPEC+ producers will continue to lead growth, adding 1.3 mb/d in 2025 and 1 mb/d in 2026, bolstered by rising output of US NGLs, Canadian crude and US, Brazilian and Guyanese offshore oil,” the advisory firm declared in the report.

According to the company, global oil demand growth for 2025 has been repeatedly downgraded since the start of the year, by a combined 350 kb/d. It added that demand is now projected to rise by around 700 kb/d in 2025 and 2026.

“The latest data show lacklustre demand across the major economies and, with consumer confidence still depressed, a sharp rebound appears remote,” Rystad noted.

Consumption in emerging and developing economies has been weaker than expected, with China, Brazil, Egypt and India all revised down compared with last month’s Report. However, aviation has been an exception, with robust summer travel propelling jet fuel demand to all-time highs in both the United States and Europe.

Rystad stated that global jet kerosene demand remains on track to increase by 2.1% or 7.7 mb/d in 2025, but still 180 kb/d below the 2019 pre-Covid level.

Global observed oil inventories, Rysatd stated, built by 1.5 mb/d in 2Q25, with Chinese crude stocks rising by 900 kb/d and US gas liquids another 900 kb/d. Nonetheless, crude and product stocks in major pricing hubs remain well below historical averages.

“While oil market balances look ever more bloated as forecast supply far eclipses demand towards year-end and in 2026,” Rystad pointed out, noting however that additional sanctions on Russia and Iran might curb supplies from the world’s third and fifth largest producers.

The U.S. Department of the Treasury had at the end of July announced its most significant Iran-related sanctions since 2018, aimed at making it more difficult for Iran to sell its oil. Washington is also pressuring major buyers of Russian crude oil, most notably India, to scale back purchases, it observed.

Also, the European Union has imposed a ban on imports of oil products refined from Russian crude oil starting in January 2026. It will also set a lower price cap for Russian oil from 3 September as part of its 18th sanctions package against Moscow.

By contrast, restrictions on Venezuela have been eased with Chevron recently awarded a new license to operate and export oil.

“While it is still too early to determine the outcome of these latest policy changes moving in different directions, it is clear that something will have to give for the market to balance,” Rystad stated.