At the start of 2026, the international oil market has been unsettled by escalating geopolitical tensions. Under the threat of U.S. tariff hikes, oil exports from Iran and Venezuela face immense pressure. Iran's crude oil loading volumes have dropped by 350,000 barrels per day from their October 2025 peak, hovering around 1.6 million barrels per day in November and December 2025, with substantial export volumes still stranded at sea. Furthermore, Venezuelan crude exports plummeted from 880,000 bpd in December 2025 to approximately 300,000 bpd in early January 2026, largely due to U.S. blockades targeting sanctioned tankers traveling to and from Venezuela.

In contrast, despite ongoing attacks on its energy infrastructure, Russia saw a significant rebound in domestic refinery operations and exports in December 2025. Crude oil production increased by 550,000 barrels per day month-on-month, reaching its highest level in nearly 33 months. However, to counter sanctions and expand exports, Russia deepened discounts on crude and refined products, eroding its oil export revenues. Data released by Russia's Ministry of Finance shows that in December 2025, total revenue from oil and gas amounted to approximately $5.71 billion, a year-on-year decrease of 43.3%. During the same period, drone attacks on vessels and international oil facilities in the Black Sea and Caspian Sea regions disrupted Kazakhstan's oil exports, while several OPEC producers in the Middle East also saw production declines. However, these reductions were largely offset by Russia's substantial production rebound.

The International Energy Agency (IEA) recently released its January 2026 Global Oil Market Report, indicating that influenced by geopolitical disruptions, the U.S. cold snap, and a weakening U.S. dollar index, the price of Brent crude futures in London surpassed the $70 per barrel threshold during intraday trading on January 29, reaching its highest level since September 2025.

Despite rising oil prices and declining supply, it remains premature to conclude that “tightening supply will emerge in the international oil market.” In fact, oversupply continues to dominate the current global oil market, acting as a restraint on international oil price increases. The London Brent benchmark crude price is $16 per barrel lower than a year ago, and a global oil supply surplus has already formed over the past 12 months.

Looking ahead to 2026, the global oil market will continue to face significant oversupply pressures, primarily due to three factors:

First, global oil supply has grown robustly since early 2025. Within the OPEC+ alliance—comprising OPEC member states and non-OPEC producers—Saudi Arabia led supply growth among OPEC+ nations in 2025 as it gradually exited production cuts. Among non-OPEC producers, the United States, Canada, and Argentina drove the majority of supply increases. The report projects that following a 3 million bpd increase in 2025, global oil supply could rise by an additional 2.5 million bpd in 2026 to reach 108.7 million bpd under current policy conditions, barring major and sustained supply disruptions. Non-OPEC producers are expected to contribute 1.3 million bpd to this 2026 growth, accounting for nearly 60% of the total increase.

Second, global oil inventories have surged significantly. Data shows that in 2025, observable global oil stocks increased by 470 million barrels, averaging a daily rise of 1.3 million barrels. The most notable growth occurred in floating storage, as well as inventories in China and the United States. In November 2025 alone, global observable oil stocks surged by 75.3 million barrels, with a daily increase of 2.5 million barrels. Crude oil stocks accounted for 96% of this increase, primarily from onshore storage. Industrial oil stocks in OECD countries rose by 7.3 million barrels to 2.838 billion barrels, aligning with the five-year average inventory level. Global oil inventories rose further in December 2025 due to increased refined product stocks.

Finally, global refinery output expanded. The report indicates that global crude oil processing by refineries surged by 2 million barrels per day (bpd) in December 2025 to a peak of 85.7 million bpd, ahead of seasonal maintenance at facilities in the United States, Europe, the Middle East, and Asia during the first quarter of 2026. For the full year 2026, global crude processing is projected to average approximately 84.6 million bpd, representing a daily increase of 770,000 bpd. While this growth rate is slightly lower than the 930,000 bpd increase in 2025, the overall upward trend remains intact.

Global oil demand is growing, but at a limited pace. The International Energy Agency (IEA) forecasts that global oil demand will increase by 930,000 barrels per day in 2026, up from 850,000 barrels per day in 2025, with non-OECD countries again accounting for all of the growth. This projected demand growth reflects market adaptation and recovery following the significant shock of U.S. tariff hikes in 2025, as well as a normal response to the decline in international oil prices.

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