Oil slides to five-month low as 'unusually bearish' IEA report forecasts bigger surplus

[Data analyzing in commodities energy market: the charts and quotes on display. US WTI crude oil price analysis. Stunning price drop for the last 20 years.]
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Crude oil futures fell to their lowest since May after the International Energy Agency said the oil market is facing an even larger surplus than previously anticipated, and as the U.S. and China kept trade tensions high by imposing port fees on each other's ships.

In its monthly report [https://www.iea.org/reports/oil-market-report-october-2025], the IEA said it now forecasts oil supply growth of 3 million bbl/day in 2025 and 2.4 million in 2026, compared to previous estimates of 2.7 million bbl/day and 2.1 million bbl/day, respectively, while slightly lowering its global demand growth outlook, seeing increases of 710,000 bbl/day this year and 699,000 bbl/day next year.

The latest outlook expands the IEA's prediction of a 2026 surplus to as much as 4 million bbl/day from ~3.3 million bbl/day just last month; a 4 million-barrel surplus would be equal to nearly 4% of world demand, and is much larger than other analyst predictions.

"Oil use will remain subdued over the remainder of 2025 and in 2026, resulting in annual gains forecast at around 700,000 bbl/day in both years," the IEA wrote. "This is well below historical trend, as a harsher macro climate and transport electrification make for a sharp deceleration in oil consumption growth."

In an indication of extra supply heading to the market, the IEA said the amount of oil currently seaborne in September rose by 102 million barrels, which it called the largest increase since the COVID-19 pandemic, partly due to surging Middle East production.

The IEA report was "unusually bearish" and added to the oil market's downside momentum, Ritterbusch said in a note.

China announced sanctions Tuesday against five U.S.-linked subsidiaries of South Korean shipbuilder Hanwha, while the U.S. and China will begin charging additional port fees on ocean shipping firms, after President Trump said Friday that the U.S. would hit Chinese imports with a 100% additional tariff after China expanded export controls on rare earths.

Front-month Nymex crude (CL1:COM [https://seekingalpha.com/symbol/CL1:COM]) for November delivery closed -1.3% to $58.70/bbl and front-month Brent crude (CO1:COM [https://seekingalpha.com/symbol/CO1:COM]) for December delivery ended -1.5% to $62.39/bbl, the lowest settlement value for both benchmarks since May 7, while front-month Nymex November natural gas (NG1:COM [https://seekingalpha.com/symbol/NG1:COM]) finished -2.9% to $3.028/MMBtu, its fourth loss in five sessions.

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