Agency Has Cut Its 2026 Global Oil Supply Forecast, Citing Renewed Conflict in the Middle East, and Now Expects the Largest Supply Deficit

The agency projects global oil supply will fall by 4.3 million barrels per day, roughly 4%, this year, bringing total supply down to 102.02 million barrels per day in 2026 — its lowest forecast for the year so far. In its July report, the IEA had predicted a decline of 3.7 million barrels per day; it has now lowered that estimate by an additional 600,000 barrels. The IEA said it revised down supply expectations for the rest of the year because no agreement has yet been reached to reopen the Strait of Hormuz and ensure uninterrupted passage through the Bab el-Mandeb Strait.

The market faces a supply deficit of 1.8 million barrels per day, with the 2026 shortfall expected to be the largest in five years. High energy prices are also weighing on demand. The agency raised its forecast for the decline in global oil demand in 2026 by about 50%, to 1.6 million barrels per day — the biggest annual average demand contraction since the COVID-19 pandemic in 2020. Alternative routes have limited losses.

The IEA noted that production losses have been more contained than the worst-case scenarios discussed at the start of the conflict, with Saudi Arabia and the United Arab Emirates offsetting part of the disruptions through alternative pipelines and tanker networks in the Strait of Hormuz. U.S. Energy Secretary Chris Wright said about 9 million barrels per day were shipped from the region over the past week, roughly half of pre-war volumes. The IEA expects the market to return to a supply surplus toward year-end and global stocks to recover in 2027. However, it stressed that with current stock buffers depleting rapidly, reopening the Strait of Hormuz is becoming increasingly urgent and market risks remain high. (Reporting by Ekonomim) — This is a machine-generated summary based on Ekonomim reporting.