IEA forecasts 2026 oil supply drop amid Middle East disruptions

The International Energy Agency (IEA) has adjusted its global oil supply outlook, forecasting a decrease of 5.7 million barrels per day (MMbpd) in 2026. This reduction is attributed to prolonged disruptions in the Middle East, which are expected to delay the recovery of Gulf production until 2027.

Global oil supply for the current year is now expected to average 100.7 MMbpd, which is 1.3 MMbpd below previous estimates. The IEA also lowered its demand outlook, projecting that global oil consumption will decline by 2.5 MMbpd in 2026 due to higher fuel prices and disrupted product flows. While the Americas are expected to lead production growth, they are unlikely to offset the supply losses in the Gulf.

Global inventories are tightening significantly, with cumulative draws of 507 million barrels recorded since February. Security risks have also impacted infrastructure; Saudi Arabia recently shut its 1,200-kilometer East-West pipeline as a precaution following drone strikes originating from Iraq. This pipeline is critical for transporting 4 million to 5 million bpd to the Red Sea port of Yanbu.