IEA projects 5.7 million barrel per day drop in 2026 global oil supply

The International Energy Agency (IEA) has projected a significant decrease in global oil supply for 2026, estimating a drop of 5.7 million barrels per day (mb/d) to an average of 100.7 mb/d. This forecast follows a reduction in supply projections for the current year by an additional 1.3 mb/d.

Global oil demand forecasts for 2026 have also been revised downward. The IEA now anticipates a decline of 2.5 mb/d, primarily driven by lower consumption of middle distillates and petrochemical feedstocks. This revision is attributed to rising hydrocarbon prices and ongoing geopolitical tensions in the Middle East.

Security risks and disruptions have significantly impacted production. In August, over 10 mb/d of Gulf production remained off the market due to security concerns. The IEA noted that hostilities in the Strait of Hormuz, a critical transit point for 20% of the world's oil, have contributed to price volatility. Consequently, the agency has postponed the expected full recovery of Middle Eastern supplies until 2027.

Global oil inventories have continued to decline, falling by 95 million barrels in August. Since February, the cumulative reduction has reached 507 million barrels. These tightening supply conditions and refining system limitations have placed upward pressure on prices, with North Sea Dated crude reaching $113.48 per barrel on September 9.