The International Energy Agency (IEA) predicts a surplus of 4 million barrels per day in the oil market next year. This forecast includes a supply boost from non-OPEC+ countries of 1.2 million barrels per day, following a 1.6 million barrel increase this year. Oil demand is expected to rise by just 700,000 barrels per day. The IEA’s calculations assume that current OPEC+ production is about 1 million barrels per day higher than estimates from OPEC and S&P Global Commodity Insights.

Surplus Dynamics Analysis

Five years ago, during the coronavirus pandemic, there were also high surpluses, but they lasted only two quarters. Oil prices dropped then, leading OPEC+ and other producers to reduce supply and restore market balance. Given these previous patterns, it is uncertain whether the supply increase projected by the IEA will actually happen. The predicted high surplus might not materialize as the agency expects. The IEA’s forecast of a significant oil supply surplus for next year is causing negative sentiment in the market. However, we believe these supply predictions are too optimistic and unlikely to come true. This difference in perspectives presents a chance for traders who can see beyond the headline figures.

Market Opportunities and Strategies

Recent data raises questions about the forecast. For example, the Baker Hughes rig count for the week of October 17, 2025, showed a decline in active US rigs, indicating a possible slowdown in production growth outside OPEC+. Furthermore, key OPEC+ members have recently reiterated their commitment to stabilizing the market, suggesting they might cut production if a surplus begins to build. These elements challenge the aggressive supply growth assumptions in the IEA’s model. Looking back, a similar situation occurred five years ago during the COVID-19 pandemic, when a massive supply glut led to a rapid price drop. In response, producers quickly cut back on production. It is unlikely that producers will allow another surplus of that size, making proactive supply adjustments seem more likely than the IEA’s estimates suggest. Additionally, China’s recent import figures for September 2025 were stronger than expected, indicating that the IEA’s demand growth estimate of 700,000 barrels per day may be too low. This creates an environment where market volatility is expected to increase as traders assess the bearish IEA forecast against the more optimistic reality of producer reactions. Selling out-of-the-money puts on WTI or Brent crude futures expiring in December and January could be a wise strategy. This would enable traders to collect premiums from the heightened market fear while banking on OPEC+ actions preventing a major price collapse. Alternatively, traders may want to consider bull call spreads. This strategy profits from a modest price rebound while limiting downside risk. It leverages the idea that prices may have overcorrected downward based on the IEA’s report. The key factor to monitor in the upcoming weeks will be any statements leading up to the next formal OPEC+ meeting in early December. Create your live VT Markets account and start trading now.

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