ING analysts Warren Patterson and Ewa Manthey have highlighted mounting risks to the global oil market as supply disruptions combine with expanding inventory builds to create a widening deficit outlook for 2026. Brent crude prices ended largely flat as ongoing US-Iran negotiations remain deadlocked and Russian port infrastructure has so far escaped significant damage from recent military operations. A major drone attack on Russia's Novorossiysk port did not result in reported damage to oil terminals, providing some relief to supply concerns.
However, inventory data painted a more bearish picture. According to the US Energy Information Administration (EIA), commercial crude oil inventories surged by 17.42 million barrels over the past week, marking the largest weekly increase since January 2023. When accounting for 6.12 million barrels of Strategic Petroleum Reserve (SPR) releases, total crude stocks rose by 11.31 million barrels.
The International Energy Agency (IEA) has forecast a more dire outlook for the global oil market. The agency expects the global oil market to be in a 1.8 million barrel per day deficit in the third quarter of 2026, which represents a deterioration from the previous month's estimate due to renewed Middle East disruptions. Global oil supply grew by 2.4 million barrels per day in July but remains 6.3 million barrels per day lower year-on-year.
The IEA now expects full-year oil supply to fall by 4.3 million barrels per day in 2026, with aggressive downward revisions also applied to demand forecasts. The demand outlook has also weakened considerably. The IEA now expects global oil demand to fall by 1.6 million barrels per day year-on-year in 2026, primarily due to Persian Gulf disruptions and elevated fuel prices.
In contrast, the Organization of Petroleum Exporting Countries (OPEC) has maintained a more optimistic stance. OPEC expects global oil demand to grow by 580,000 barrels per day year-on-year in 2026, a projection that ING analysts note appears overly optimistic given the elevated refined product prices observed throughout the year. The divergence between IEA and OPEC forecasts underscores growing concerns about the balance between supply and demand as the oil market navigates both geopolitical disruptions in the Middle East and macroeconomic headwinds affecting energy consumption.
Source: ING analysis as reported by FXStreet
Source: fxstreet.com