IEA Cuts Global Oil Supply Forecast Amid Ongoing Middle East Tensions

The International Energy Agency (IEA) has revised its forecast for global oil supply downward due to ongoing hostilities in the Middle East. According to the IEA's monthly oil market report, global oil supply will fall by 4.3 million barrels per day (bpd), or around 4%, this year.

This decline is attributed to renewed tanker attacks in the Strait of Hormuz and the conflict spreading to other regions, including Yemen's Armed Forces launching attacks in the Red Sea.

The IEA now expects a supply deficit of 1.27 million bpd this year, wider than its previous forecast of 860,000 bpd. The agency also notes that Middle East oil loadings had recovered to 20 million bpd at the start of July but dropped back to 12 million bpd later in the month.

The IEA sees a possible surplus of 4.61 million bpd next year if tensions are de-escalated. This surplus could allow oil stocks to recover by the middle of next year, after 410 million barrels of cumulative stock draws since the war on Iran started.