ع
The International Energy Agency forecast that world oil supply will average 100.7 million barrels per day in 2026, a drop of 5.7 million bpd from 2025 levels. This outlook reflects a 1.3 million bpd downward revision from the agency’s previous estimate as prolonged disruptions from the Iran conflict delay Gulf production recovery until 2027. Global output already fell 1.6 million bpd month-on-month in August to 100.1 million bpd with more than 10 million bpd of Gulf supply remaining shut in. The IEA expects supply to rebound by 8 million bpd in 2027 once conditions allow a return to normal flows.
The agency’s latest Oil Market Report attributes the weaker supply picture to stalled diplomatic talks and renewed attacks on Middle East shipping routes including the Strait of Hormuz. Gulf oil exports averaged about 13 million bpd in August nearly half their pre-war level while refined product and LPG exports stayed 3.7 million bpd below February figures. These constraints have tightened the global balance and pushed crude prices toward 110 dollars per barrel this week for the first time since May.
On the demand side the IEA now projects global oil consumption will decline by 2.5 million bpd in 2026 a cut of 940,000 bpd from its August forecast. Higher fuel prices and disruptions to product availability have accelerated this contraction which exceeds the drop seen during the early stages of the COVID-19 pandemic in severity though not in absolute terms. The agency anticipates demand will rebound by 2.6 million bpd in 2027 as trade flows normalize and economic conditions improve.
Global inventories tightened further in August with observed stocks falling by another 95 million barrels and cumulative draws since February reaching 507 million barrels or an average of 2.8 million bpd. The IEA reported that total oil stocks now stand at 7.8 billion barrels their lowest level since 2023 while oil held on water declined by 65 million barrels as tanker attacks reduced Middle East traffic. Inventories have played a crucial role in balancing the market so far but buffers are shrinking rapidly according to the report.
Outside OPEC+ the Americas Quintet of producers is expected to drive non-OPEC growth adding 1.4 million bpd in 2026 and another 1 million bpd the following year. This expansion will only partly offset losses from the Middle East and Russia where output remains constrained by conflict and sanctions. The IEA assessment found that such non-OPEC gains have supported Atlantic Basin crude exports to markets east of Suez by 3.5 million bpd since the start of the war.
Saudi crude supply plunged 2.3 million bpd in August to just 6 million bpd the lowest level in more than three decades after attacks hit facilities and shipping routes. OPEC+ production as a whole declined by 1.8 million bpd to 38.8 million bpd that month. The IEA warned that with the global refining system stretched to the limit and commercial stocks depleting further demand reductions may be required to close the supply gap in coming months.
