Saudi Aramco dismisses oil surplus-narrative
By Tsvetana Paraskova via OilPrice.com
“It (spare capacity) is at 2.5% and we need a minimum of 3%. If OPEC+ further unwinds cuts, spare capacity will fall even further and we will need to watch this very carefully.” – Amin Nasser, CEO Saudi Aramco
Predictions of a massive oil glut are grossly exaggerated, as demand continues to rise and global inventories are below the five-year average, said Saudi Aramco’s top executive Amin Nasser.
“Oil glut predictions are seriously exaggerated,” Nasser said in the corridors of the World Economic Forum in Davos, Switzerland, last week, Reuters reported.
Global oil supplies are low, while the barrels bobbing on tankers are largely sanctioned oil, said the CEO of the world’s largest oil company and largest crude exporter.
Moreover, spare capacity (spare capacity – the buffer to quickly ramp up production in case of emergencies) has shrunk significantly over the past year, limiting the ability to increase production in the event of major supply disruptions, Nasser said.
The market is overfed , analysts say, reflected in only brief price spikes in recent weeks, spurred by geopolitical developments.
Most investment banks and the EIA predict that average oil prices will remain below $60 per barrel in 2026 due to an emerging and persistent oversupply in the market, especially in the first half of the year.
But OPEC, with Saudi Arabia at the helm, maintains that the market will be balanced because demand growth is robust and will remain so through 2027.
The International Energy Agency (IEA) raised its forecast for oil demand growth this week and is now counting on growth of 930,000 barrels per day (bpd) in 2026, an increase of 70,000 bpd from last month’s estimate.
The upward revision reflects a recovery in commodity demand in the petrochemical industry, on top of expectations of normalized economic conditions following the Trump administration’s unpredictable and chaotic tariff policies last year. But the market remains oversupplied, the Paris agency nuances. “Indeed, benchmark crude oil prices remain $16/bbl lower than a year ago, reflecting the large global supply surplus that built up over the past 12 months, in line with our forecasts,” the IEA said.