IEA Cuts Oil Supply Forecast Amid Ongoing Middle East Conflicts
The International Energy Agency (IEA) has lowered its forecast for global oil supply in 2026 due to ongoing conflicts in the Middle East. The agency expects a decrease of 4.3 million barrels per day, or around 4%, this year as a result of renewed hostilities in the region.
The US-Iran ceasefire broke down last month, leading to resumed tanker attacks in the Strait of Hormuz and the spread of conflict to other areas, including Yemen's Red Sea. The IEA notes that global oil supply has fallen well below demand due to various factors, including the shutdown of the Strait of Hormuz, the US blockade of Iranian exports, and reduced Kazakh CPC Blend exports.
The expected supply drop will take total supply to 102.02 million barrels per day, which is the IEA's lowest forecast yet for this year. This would put global oil supply around 1.27 million barrels per day below demand, widening from an 860,000 bpd deficit implied in the IEA's July forecasts.
The agency expects an oil market deficit of 1.8 million bpd over July-September, marking a 1 million bpd downward revision from its July forecast. However, it sees global oil supply outstripping total demand by 4.61 million bpd next year, assuming de-escalation in the coming months.