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The International Energy Agency (IEA) cut its global Oil supply and demand forecasts for 2026 amid shipping disruptions in the Middle East.
In its August Oil Market Report, the agency said, “With an agreement enabling the reopening of Hormuz and unhindered transit through the Bab el-Mandeb Strait still elusive, we have again lowered supply estimates for the rest of the year.”
Global Oil supply is now expected to fall by an average of 4.3 million barrels per day (bpd) in 2026 to around 102 million bpd. The agency, however, expects supply to rebound by 8.3 million bpd next year to 110.3 million bpd.
World Oil demand is forecast to decline by 1.6 million bpd in 2026, a 510,000 bpd larger drop than estimated in last month’s report. The agency noted that “elevated fuel prices are putting further downward pressure on oil use.”
However, the annual decline in demand is expected to ease from 4.9 million bpd in the second quarter to 2.8 million bpd in the third before returning to growth in the final quarter. Global Oil demand is then forecast to rise by 2.4 million bpd in 2027.
“Although the market is projected to return to surplus towards the end of this year, risks remain substantial and the urgency of reopening the Strait has increased, as previously available inventory buffers are rapidly depleting,” the IEA said.
