IEA Warns of Further Oil Supply and Demand Decline Amid Record Fuel Prices
The International Energy Agency (IEA) has revised its forecast for global oil supply and demand this year, warning that both will fall further than previously thought.
The IEA attributes the decline to a lack of progress in ending the Iran war, which is delaying the return of normal Middle East flows into 2027. This is sending fuel prices soaring, with crude reaching $110 a barrel for the first time since May and record highs being hit by fuels like diesel.
The IEA now expects global oil supply to drop by 5.7 million barrels per day, or six percent, this year, up from its previous forecast of a four percent decline. Meanwhile, demand is also falling more than expected, with the world's oil use dropping by 2.5 million bpd this year, more than the previously predicted 1.6 million bpd decrease.
The IEA warns that 'inventories have so far played a crucial role in balancing the market,' but with global stocks falling by 3.1 million bpd in August and refining systems stretched to their limits, the need for progress in resolving conflicts in the Middle East and Russia-Ukraine war is greater than ever to avoid further market tightening.