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Investing.com -- The global oil market may be tighter than headline figures suggest, the International Energy Agency (IEA) said on Friday, even as supply growth continues to outpace demand. Refineries are ramping up activity to meet strong seasonal demand from travel and power generation, putting upward pressure on physical markets.
The IEA raised its global supply growth forecast by 300,000 barrels per day to 2.1 million bpd, while demand is expected to increase by just 700,000 bpd—highlighting a projected surplus.
But despite the revised forecasts, the IEA said increased refinery activity to meet summer travel and power needs is tightening the market, while the latest OPEC+ supply boost had little impact.
“The decision by OPEC+ to further accelerate the unwinding of production cuts failed to move markets in a meaningful way given tighter fundamentals,” the IEA noted in its monthly report. “Price indicators also point to a tighter physical oil market than suggested by the hefty surplus in our balances.”
Industry leaders echoed that view earlier this week, saying new supply hasn’t translated into rising inventories, suggesting that market demand for more oil remains strong.
OPEC+, which accounts for around half of global oil output, has been limiting production in recent years to support prices. However, the group shifted course in 2025, aiming to reclaim market share amid pressure from U.S. President Donald Trump to increase supply and ease gasoline prices.
The alliance, which includes OPEC members and partners like Russia, started unwinding its 2.17 million barrels per day in cuts this April, initially raising output by 138,000 bpd. That was followed by monthly increases of 411,000 bpd in May, June, and July.
Most recently, OPEC+ approved a 548,000-bpd rise for August and is expected to agree on a sizable additional hike for September at its upcoming meeting, according to Reuters.
Looking ahead to 2025, the IEA trimmed its demand growth estimate slightly to 720,000 bpd, while supply is expected to climb by 1.3 million bpd, again signaling a potential surplus.