Global oil markets are heading for a major glut, at least that is the message at present being pushed by pundits. Taking a bird’s-eye view, it, however, looks as if the market has talked itself into a glut. Most international agencies warn that supply will outpace demand in 2025–26. They all predict that inventories will quietly balloon, and Brent will drift down into the low-60s or even the low-50s. At the same time, analysts are falling over each other to point out that there is a significant sign of this: swelling “oil on water”, softening spreads, and growing non-OPEC output. These are seen as data confirming that the market is overshooting demand. In my opinion, the latter smells of something else: “the narrative has become self-reinforcing.” It seems that the world is drowning in crude; the glut is inevitable; the only debate is how deep the correction will be. Now, let’s look at other factors too.

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