Economic Insights – Baghdad
The United States anticipates that global oil surpluses will surpass earlier forecasts for the years 2025 and 2026, primarily driven by increased production in the U.S. and from non-OPEC countries. Furthermore, estimates suggest that sanctions will have a minimal impact on Russian oil production.
According to the U.S. Energy Information Administration (EIA), the global oil markets are expected to experience a surplus averaging one million barrels per day in 2026, an upward revision from the previous expectation of 800,000 barrels per day noted last month. This volume is equivalent to twice the surplus projected for the current year, which has also been revised higher in light of new data.
These renewed projections stem from the anticipated robustness in oil production from the United States and non-OPEC nations, which may pose challenges to OPEC+’s strategy to ramp up output within this calendar year.
The EIA suggests that oil inventories could see a significant uptick if the coalition proceeds with an expected production increase in April.
The projections of rising surpluses further support the EIA’s assessments that the sanctions imposed by the Biden administration on Russian oil in January will not substantially disrupt the country’s oil output. Notably, Russian supply has only recently begun to show indications of decline.
In its report, the EIA stated, “While recent sanctions on Russia are expected to limit its oil production somewhat more than our previous estimates, the predominant effect will be a reshaping of global oil trade flows, which has not been fully accounted for in our forecasts.”
However, the agency acknowledged that the potential for future tariffs and additional sanctions targeting Russia introduces an element of uncertainty for oil pricing.
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