Oil prices linger near two-month low as IEA warns of record supply glut in 2026

Oil prices held near a two-month low after the International Energy Agency (IEA) said the market is on track for a record supply surplus next year.

Brent crude traded near $66 a barrel after closing Wednesday at its lowest since June 5, while West Texas Intermediate hovered around $63.

The agency’s monthly report showed that global inventories will build at a faster pace than the average increase recorded during the pandemic year of 2020.

Meanwhile, traders are watching preparations for Friday’s summit between U.S. President Donald Trump and Russian President Vladimir Putin, which could result in either easing or tightening of U.S. sanctions on an OPEC+ member.

Trump warned of “very severe consequences” if Putin does not agree to a ceasefire, following calls with European leaders.

Prices fall on rising supply

Oil has lost more than 10% since the start of the year, as the OPEC+ alliance ended the voluntary cuts introduced in 2023.

Earlier this week, the U.S. government raised its forecast for a supply surplus in 2026, while the IEA increased its estimates for production from outside OPEC and its allies, particularly in the Americas.

U.S. government data showed crude inventories rose by about 3 million barrels last week to the highest level in two months, while distillate stocks and supplies at the main storage hub in Cushing, Oklahoma, also increased.

The prompt spread for Brent — the price difference between its two nearest contracts — narrowed, indicating looser near-term market conditions. The widely watched gauge stood at 49 cents a barrel in backwardation, down from about $1 a month ago.