IEA Slashes Oil Supply Outlook as Middle East Conflict Deepens Market Deficit

The International Energy Agency (IEA) has slashed its 2026 oil supply outlook due to renewed hostilities in the Middle East, which have pushed the global market deeper into a deficit. The agency now expects a supply decline of 4.3 million barrels per day this year, down from 3.7 million previously forecasted.

This revised assessment marks the lowest total global supply level for 2026 to date, at 102.02 million barrels per day. The IEA attributes the shortfall to several factors, including the shutdown of the Strait of Hormuz, US sanctions on Iranian exports, and attacks in the Bab el-Mandeb Strait.

The widening supply gap has resulted in a market deficit of approximately 1.27 million barrels per day this year, up from 860,000 previously forecasted. The IEA expects an oil market deficit of 1.8 million barrels per day over the July-to-September period, representing a 1 million barrel per day downward revision from its previous forecast.