IEA Cuts Oil Supply Forecast Amid Ongoing Middle East Conflicts
The International Energy Agency (IEA) has released its latest monthly report, projecting a significant contraction in global oil supply and demand in 2026. According to the report, global oil supply is expected to decline by 5.7 million barrels per day (approximately 6%), a downward revision from the previous forecast of roughly 4%. This decline is attributed to ongoing conflicts in the Middle East and Ukraine, which have pushed back the normalization of oil exports from the region to 2027 or later.
The IEA notes that inventory buffers are shrinking rapidly, with global inventories falling by 3.1 million barrels per day in August. This has led to a sharp downward revision in 2026 global demand, now projected to decline by 2.5 million barrels per day compared to the previous forecast of 1.6 million barrels per day.
The agency warns that the oil market remains extremely vulnerable to geopolitical risks, and the longer the conflicts persist, the more supply constraints and price surges will continue to amplify each other.