Oil Glut: What if IEA is not telling the truth?

[dan_s]

Addressing The Elephant In The Room - Where The Hell Is The Oil Surplus?
HFI Research on December 5

Q4 2025 is coming to a close soon, and there’s one thing all oil market participants must acknowledge: this quarter was not as oversupplied as initially thought. As a matter of fact, and let me be blunt about it, it’s not that oversupplied at all.

In the IEA’s oil market report published in November, it estimated that the global imbalance for Q4 2025 is 3.5+ million b/d. < All of the oversupply is on ships at sea, which cannot be verified.

As you can see, most of the “surplus” is via oil-on-water, but there’s more to this data that we need to show you.

The China Variable

Chinese onshore crude oil inventories have increased materially this year. The surplus that’s in everyone’s Excel model is largely due to this material increase (coupled with the increase in oil-on-water). But here’s a question I want you to think about: if China’s crude buying is due to 1) national security and 2) geopolitical strategy, should this still be counted via the balance?

Inversely, oil watchers should remember that in 2022, the Biden administration coordinated with the IEA to release nearly ~300 million bbls of crude from the SPR. That was a supply increase, so why wouldn’t China’s stockpiling of SPR be considered a demand increase?
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MY TAKE: IEA has been told to create the False Paradigm that the world is over-supplied because the EU wants to hold down inflation (who doesn't?) and so does Team Trump. The problem is that doing so will also hold down investment in finding new oil supplies and create an oil shortage eventually. This is why I am short-term bearish and long-term bullish on oil prices. For at least 1H 2026 you need to stay heavily weighted to natural gas.

[mrbill]

Key word in your "Blue Comments" is "Verified". Same goes for the supposed capacity and ability to really
pump the oil reserves these Opec players "claim" they have. Have they ever been "vetted" by a reliable outside
group. What if what they claim is less than what they really have? Sorry, they are so trustworthy and unselfish.

[dan_s]

Articles by Dr. Anas Alhajji that debunk the IEA's False Paradigm

Related Links:

Oil Inventories Flash Red: Crude, Gasoline, Distillates – All Critically Low

Brazil Shatters Crude Export Records in October: A Short Note

The Hype of Oil on Water

Oil Market Update: Debunking the Bearish Narrative

US Crude Oil Production Reached a Record High in August, But What About Shale? A Short Note.

"One of the major problems now is that 2025 is nearing its end, yet forecasts for demand and market balances differ widely. Thus, 2026 forecasts not only have their own variances but also inherit the discrepancies from 2025, creating greater confusion among market participants and investors. Historically, large forecast differences at the start of the year converged by year-end. That is not happening now. As previously stated, we will never know actual global demand; we can only use various tools to assess which forecast is more credible. Regardless, the IEA has an 18-year record of underestimating oil demand, according to the IEA itself, President Trump will remain the main source of volatility in the oil market with China and OPEC+ remaining the main driver of market fundamentals."

2025 Estimates
After several upward revisions, the IEA now forecasts global oil demand growth of 800 kb/d in 2025, while OPEC estimates it at 1.3 mb/d—a whopping 500 kb/d difference as shown in Figure 1. The US EIA expects 1 mb/d growth. We at EOA have revised ours down by 80 kb/d to 1.1 mb/d, partly due to weaker-than-expected jet fuel demand earlier this year. Forecasts should be converging by year-end, but they are not. Using multiple variables, one thing is clear: the IEA is significantly off, and we expect further upward revisions."

Bottom line: To the casual observer, the oil market looks like a perfect storm wrapped in thick fog — a setup that makes misinformation spread effortlessly, especially through agenda-driven media outlets."
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MY TAKE: As I have posted many times, there are "market forces" that want low oil prices in order to achieve their goal of lowering inflation in order to get the Fed to lower interest rates.

[dan_s]

If Russian or Venezuelan oil exports are curtailed in 2026, oil price will rise.