Oil Supply Decline Accelerates as Middle East Conflicts Bite
The International Energy Agency (IEA) has issued a warning that global oil supply and demand will decline further in 2026. The agency's monthly report revealed that world oil supply is now expected to drop by 5.7 million barrels per day, up from the previously predicted four percent decline.
This significant decrease in supply is largely attributed to a lack of progress in ending the Iran war, which has delayed the return of normal Middle East flows into 2027. The conflict has resulted in increased attacks on oil tankers in Middle Eastern shipping routes, causing crude prices to surge towards $110 a barrel.
The IEA also noted that fuel prices have hit record highs, particularly for diesel, with global stocks falling by 3.1 million bpd in August. As the world's inventories are being used up at a record pace, the agency emphasized the need for progress in resolving the conflict to avoid further market tightening.