IEA Cuts Oil Supply Forecast Amid Ongoing Middle East Tensions

The International Energy Agency (IEA) has reduced its forecast for global oil supply in 2026, citing ongoing hostilities in the Middle East as a major factor. The agency expects a drop of 4.3 million barrels per day, or around 4%, this year due to renewed tanker attacks in the Strait of Hormuz and a breakdown in the U.S.-Iran ceasefire.

The expected supply drop is the lowest forecast yet for this year, taking total supply to 102.02 million bpd. This would put global oil supply around 1.27 million barrels per day below demand this year, widening from an 860,000 bpd deficit implied in the IEA's July report.

The IEA also expects an oil market deficit of 1.8 million bpd over July-September, marking a 1 million bpd downward revision from its July forecast. This would be the deepest quarterly deficit since the fourth quarter of 2021.