IEA Cuts Oil Forecasts Due to Hormuz Blockade

The International Energy Agency (IEA) has revised its forecast for global crude demand and supply in 2026, citing the ongoing blockade of the Strait of Hormuz as a major factor. The agency expects oil prices to remain high due to the lack of an agreement to reopen the strait.

In its August bulletin, the IEA noted that new disruptions in the Strait of Hormuz have hindered the recovery of oil markets, underscoring the urgency of reopening it. Global reserves have fallen to levels not seen since April 2025, and the market is expected to remain tight due to the drop in exports from Gulf countries and Russia during the peak summer travel season.

The IEA estimates that global oil demand will decrease by 1.6 million barrels per day (mb/d) in 2026, an additional decline of 510,000 barrels per day compared to its previous projection. However, the agency expects this contraction to soften over the months, with a rebound of 2.4 mb/d expected in 2027.

The IEA also revised down its crude production forecast for 2026, estimating an average decline of 4.3 mb/d due to ongoing hostilities and maritime disruptions. The agency anticipates a rebound in supply in 2027, with an increase of 8.3 mb/d expected.