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Where are the barrels of oil? IEA gap deepens confusion over looming glut: Bousso

The International Energy Agency (IEA) continues to predict a significant oil supply glut, but the uncertainty surrounding the location of nearly 1.5 million barrels of crude oil per day is putting this forecast into question. Since months, the oil market has been unable to find a direction. Prices have remained in a tight range as traders tried to understand starkly divergent projections of supply and demand from IEA and OPEC. The IEA has predicted a severe glut of oil this year and in the next due to increased global production. The Paris-based agency's latest report, released on Tuesday provided an even more pessimistic outlook. It forecast a surplus in 2025 of 2,35 million barrels a day and 4 million bpd, or nearly 4%, of global demand, next year. OPEC on the other side expects that global oil supply will closely follow demand until 2026.

This difference is remarkable, as it has never been seen before in the history of the largest commodity market in the world.

Missing Barrels

On Tuesday, the murky picture of crude oil became even more muddy when the IEA reported that it had been unable to account 1,47 million bpd in its global balances. This is the equivalent of 1.4% annual demand. The IEA's "unaccounted balance" for July was 850,000 bpd or 370,000 bpd overall for the second-quarter.

This 1,47 million bpd number is a huge blind spot that has significant implications for global supply and demand. According to the IEA, supply exceeded demand by 2,04 million bpd during August. This means that, theoretically, oversupply can grow to 3.5 millions bpd, or even shrink to 500,000 bpd. This is a big difference which could have an impact on crude oil prices.

The IEA calculates the global oil balances based on official government data, as well as private company and analyst figures about production, consumption and exports.

Due to the size of the oil market, it is not uncommon for forecasters' calculations to be "holes". This can be due to the delays in reporting by government agencies and the absence of certain data sets.

In fact, the IEA updates its historical data regularly. In its May monthly report, the agency revised upwards significant amounts of recent oil demand. This included increasing 2024 oil usage by 350,000 barrels per day, turning a reported surplus into a deficiency.

The sheer magnitude of missing barrels reported by the IEA in its August report should cause traders and investors to pause. This is especially true because it comes at a moment when the market has already been trying to make sense out of forecasters' wildly different projections.

Barrels that disappear

The IEA stated that the discrepancy in August "may be due to the delay of reporting data or the lack of data for non OECD countries."

It will take some time to fully account for the missing barrels. It is reasonable to believe that the missing barrels are due in part to two factors which have been confusing the crude market for the past year: the trading and stockpiling of oil that has been heavily sanctioned.

The first question is how much oil sanctioned is being traded. According to Kpler, the volume of crude oil transported by sea last week reached 1.25 billion barrels. This is the highest level since the Covid-19 Pandemic began. Oil held at sea, or "oil in water", has never been greater.

This build-up on the seas could be a precursor for a dramatic increase in storage overland - and a significant global oversupply. The picture is further complicated by the fact over a quarter (25%) of the oil in the water comes from countries that are under western sanctions, namely Russia, Iran and Venezuela. The majority of oil produced by these countries is transported in so-called "shadow" fleet tankers, which evade western sanctions and often hide their location by turning off satellite transponders.

The IEA may have missed some barrels because it is difficult to track the movements of oil by sea.

CRUDE HARDING

There is also the issue of China's huge oil storage volumes.

According to the IEA's forecast, global observed inventories – oil in storage and on vessels – grew by 225,000,000 barrels from January to August, reaching the highest level for four years.

China, as the world's biggest oil importer, is clearly responsible for a large portion of the increase in inventories. Beijing, however, does not publicly disclose the size of its oil storage capacities or changes to inventories. Because traders lack official data, they rely on secondary information to estimate the size of China's rapidly growing storage network and the rate at which it is being filled. According to the IEA, Chinese crude stockpiles rose by 110,000,000 barrels between April 2025 and August 2025. This estimate is based on data provided by satellite analytics firm Kayrros.

It is possible, given the lack firm data, that China's crude stock has increased by much more, and this could account for another part the IEA missing barrels.

The IEA's mysterious missing barrels may indicate that the task of calculating production, consumption and exports in the vast global oil market will become even more difficult as geopolitics continue to obscure large portions of the market.

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(source: Reuters)