Brent drops below $68 as IEA paints bleak supply picture
Crude oil prices sold off hard Wednesday after the International Energy Agency cut its demand growth outlook and projected a massive supply glut for 2026.
Brent crude fell 2.7% to $67.51 a barrel. WTI dropped 2.8% to $62.82, erasing all of Tuesday's gains in a matter of hours. Both benchmarks had touched weekly highs a day earlier, with WTI hitting $65.58 before the reversal.
IEA trims demand, holds firm on surplus
The Paris-based agency now expects global oil demand to grow by 850,000 barrels per day this year, down from 930,000 bpd in its January report. Higher crude prices at the start of the year and growing economic uncertainty drove the 80,000 bpd downward revision.
Developing economies will account for all of that growth, with China leading the way. But the composition has shifted. Petrochemical feedstocks will make up more than half the demand increase in 2026, replacing transport fuels as the main growth driver.
Supply keeps climbing. The IEA sees global output rising by 2.4 million bpd to 108.6 million bpd, leaving a projected surplus of 3.7 million bpd. That gap amounts to roughly 4% of worldwide consumption.
Stockpiles tell the same story
The surplus is already showing up in storage tanks. Global oil inventories rose by 37 million barrels in December alone, according to IEA data. Full-year 2025 stockbuilds totaled 477 million barrels, an accumulation rate of 1.3 million bpd not seen since 2020.
A brief counter-signal came last week when crude inventories plunged by 11.1 million barrels, the steepest weekly draw since mid-2023. But one week of draws does little to dent a buildup of that scale.
OPEC tells a different story
OPEC's own forecast calls for demand growth of 1.38 million bpd in 2026, about 60% above the IEA's estimate. The gap between the two agencies has been widening for months.
That disagreement matters because OPEC+ plans to begin unwinding production cuts in April. Combined with rising output from the US, Guyana, and Brazil, the supply additions could accelerate the glut if the IEA's demand numbers prove closer to reality.
Fading risk premium adds to the pressure
Geopolitics had been propping up prices. US-Iran diplomatic talks in Oman last week eased fears of a military confrontation that had supported crude through much of January and early February. Without that risk premium, the market is left staring at fundamentals that skew bearish.
WTI is now within reach of its February low at $62.39. With supply growth on track to outpace demand by nearly three to one, sellers have the advantage heading into the back half of the month.