Tight Global Oil Market: A Closer Look Behind the Surplus

Despite apparent indications of a surplus in the global oil market, the International Energy Agency (IEA) points to a tighter reality due to increasing refinery processing needs. IEA's latest report notes a rise in global oil supply by 2.1 million barrels per day this year, but this hasn't alleviated the market's tightening.

The agency emphasizes that even with OPEC+'s decision to accelerate the rollback of production cuts, summer travel demand and elevated refinery processing for power generation continue to exert pressure. Analysts indicate current price trends and strong refining margins corroborate a tighter market environment than previously forecasted.

As demand surges during the Northern Hemisphere's summer months, the IEA projects refinery processing will increase significantly. With various geopolitical factors also at play, especially U.S. tariffs affecting countries like China and Japan, the predictions about future demand remain cautiously conservative.

(With inputs from agencies.)