Oil markets are facing the risk of a significant supply overhang by 2027 as global production rebounds faster than demand growth, according to a recent outlook from the International Energy Agency on Wednesday.
The agency said global oil supply could rise sharply in the coming years as Gulf producers gradually restart shuttered oilfields following the Iran-related conflict resolution.
The forecast suggests production could climb by around 8 million barrels per day, reaching roughly 110 million barrels per day by 2027, while demand growth is expected to lag at a much slower pace.
This imbalance could create a "significant overhang" in global markets, potentially easing tight inventories and rebuilding strategic reserves, the IEA noted in its latest Oil Market Report.
The outlook follows expectations that oil flows from the Middle East will resume gradually after the recent peace agreement between the U.S. and Iran, which has helped reduce geopolitical risk premiums in crude prices.
