IEA Cuts Oil Supply Forecast Amid Middle East Tensions

The International Energy Agency (IEA) has cut its forecast for global oil supply in 2026, citing renewed hostilities in the Middle East as a major factor. The IEA expects a supply drop of 4.3 million barrels per day this year, which is a significant reduction from its previous estimate of 3.7 million bpd.

This decline will take total supply to 102.02 million bpd, which is the lowest forecast yet for this year. As a result, global oil supply will be approximately 1.27 million barrels per day below demand, widening the deficit from an initial estimate of 860,000 bpd.

The IEA attributes the decline in supply to various factors, including the shutdown of the Strait of Hormuz, US sanctions on Iranian exports, and drone attacks affecting Black Sea trade routes. Middle East oil loadings had recovered to 20 million bpd in July but dropped back to 12 million bpd later in the month.

The agency expects an oil market deficit of 1.8 million bpd over July-September, marking a significant downward revision from its previous forecast. However, it predicts that global oil supply will outstrip total demand by 4.61 million bpd next year, assuming de-escalation in the coming months.