Oil Prices Drop After IEA Warns of Supply Surplus

Oil prices fell sharply on Wednesday, January 21, 2026, after the International Energy Agency (IEA) issued a warning of an impending global supply surplus. The agency projected that rising output from major producers, including OPEC+ and U.S. shale, would outpace demand growth in early 2026, leading to oversupply concerns. Brent crude dropped 3.2% to $78.45 per barrel, while West Texas Intermediate (WTI) declined 3.5% to $75.10. The IEA’s latest monthly report highlighted a projected 1.8 million barrels per day (bpd) surplus by Q2 2026, driven by increased production from Saudi Arabia, Russia, and U.S. Permian Basin. Market analysts noted that the outlook dampened investor sentiment despite recent inventory drawdowns in the United States.