Oil Market Report - January 2026

• Global oil demand growth is forecast to average 930 kb/d in 2026, up from 850 kb/d in 2025, reflecting a normalisation of economic conditions after last year’s tariff turmoil and lower oil prices than a year ago. A recovery in petrochemical feedstocks demand will be partially offset by a continued slowdown in gasoline gains. Non-OECD countries will once again account for all of the growth in 2026.

• Global oil supply fell by 350 kb/d m-o-m to 107.4 mb/d in December, 1.6 mb/d below September’s record high. Lower output from Kazakhstan and a number of Middle Eastern OPEC producers was partly offset by a sharp rebound in Russian production. World oil supply is now projected to rise by 2.5 mb/d this year to 108.7 mb/d, following an increase of 3 mb/d in 2025. Non-OPEC+ accounts for 1.8 mb/d of the gains in 2025 and 1.3 mb/d in 2026.

• Global refinery crude throughputs surged by 2 mb/d to 85.7 mb/d in December, ahead of 1Q26 seasonal maintenance in the United States, Europe, the Middle East and Asia. Crude runs are forecast to average 84.6 mb/d for 2026, with annual growth of 770 kb/d slightly below 2025’s 930 kb/d pace. Refining margins slumped over the course of December, led by weaker profitability in Europe as middle distillate cracks halved from November’s highs.

• Global observed stocks surged by 75.3 mb in November 2025, or 2.5 mb/d, with crude oil accounting for 96% of the increase, mostly onshore. OECD industry stocks were up by 7.3 mb to 2 838 mb, largely in line with the five-year average level. Total observed oil inventories were 433 mb higher than at the start of 2025, increasing by 1.3 mb/d on average. Preliminary data showed global inventories rose further in December, led by builds in products.

• Benchmark crude oil prices jumped by about $6/bbl at the start of the new year in the wake of geopolitical developments in Iran and Venezuela, but eased by mid-month as tensions moderated. North Sea Dated fell by $0.99/bbl m-o-m in December to an average $62.64/bbl, as markets remained well supplied. This was the benchmark’s sixth consecutive monthly decline, with prices hitting a low of $60.07/bbl mid-month – the weakest since early 2021.

The new year got off to a turbulent start as geopolitical tensions rose around Iran and Venezuela, bringing new uncertainties regarding their future oil exports. Brent crude oil prices jumped by $6/bbl to around $66/bbl in the early weeks of January before easing to $64/bbl at the time of writing.

Oil exports from both Iran and Venezuela were already under pressure. Iranian loadings dropped by 350 kb/d from October’s recent high to 1.6 mb/d over November and December, with volumes piling up at sea. Venezuelan crude exports slumped from 880 kb/d in December to around 300 kb/d in early January, impacted by the US blockade of sanctioned oil tankers travelling to and from the country.

By contrast, Russian domestic refinery operations and exports rebounded sharply in December, with crude output up by 550 kb/d m-o-m to a 33-month high despite continued attacks on the country’s energy infrastructure. Widening discounts for Russian crude oil and refined products nevertheless undermined monthly export revenues, assessed at around $11 billion, or roughly half pre-invasion levels. Meanwhile, drone attacks on vessels and export infrastructure in the Black Sea and Caspian further curtailed Kazakh supplies and exports. While it is too early to assess the full implications for oil markets of these latest geopolitical developments, for now, bloated balances provide some comfort to market participants and have kept prices in check.

Indeed, benchmark crude oil prices remain $16/bbl lower than a year ago, reflecting the large global supply surplus that built up over the past 12 months, in line with our forecasts. Observed global oil stocks rose by 470 mb in 2025, or 1.3 mb/d on average. The increase was visible in the surge in oil on water, higher Chinese crude stocks and a rise in US gas liquids inventories. In November alone, observed global oil stocks jumped by 75 mb, or 2.5 mb/d, with increasing volumes moving onshore. Preliminary data point to further builds in December, most notably in China after new import quotas were issued, offsetting steep declines in crude oil inventories observed in a number of producer countries in the Middle East at the end of the year.

The current global surplus has been underpinned by a robust growth in oil supply since the start of 2025, with non-OPEC+ producers accounting for close to 60% of the 3 mb/d total increase. Saudi Arabia has led the rise in OPEC+ supply following the unwinding of production cuts, while the Americas quintet of the United States, Canada, Brazil, Guyana and Argentina has dominated non-OPEC+ increases. Barring any significant sustained disruptions to output – and if OPEC+ stays the course with its current production policy and activity in the US shale patch avoids major downshifts – global oil supplies could increase by a further 2.5 mb/d in 2026.

Combined with the hefty surplus that has built up in storage tanks and at sea over the past year, this would leave the market with a significant buffer well in excess of demand, which is forecast to increase by 930 kb/d in 2026.