IEA Warns of Worsening Oil Supply Gap Due to Middle East Conflict
The International Energy Agency (IEA) has issued a warning that the global oil supply gap will widen by 2026 due to delayed returns of normal Gulf flows. This is attributed to the lack of progress in ending the Iran war, which is expected to persist until 2027.
A recent increase in attacks on oil tankers in Middle East shipping routes has contributed to a surge in crude prices, reaching $110 a barrel for the first time since May. However, this price hike is overshadowed by the record-breaking fuel prices, particularly diesel, which have hit new highs.
The IEA forecasts that world oil supply will decline by 5.7 million barrels per day (bpd) in 2026, a 6% drop from previous estimates. This sharp decrease in supplies is being met with dwindling global inventories, with stocks falling by 3.1 million bpd in August.
The IEA emphasizes that the shrinking buffers and strained refining system necessitate progress in resolving conflicts such as the Middle East war and the ongoing Russia-Ukraine conflict to prevent further market tightening.