IEA Again Worsens Forecast for Global Oil Market

The International Energy Agency (IEA) sharply worsened its forecast for global oil supply in 2026 amid prolonged disruptions in deliveries from the Middle East. The Agency now expects that the recovery of deliveries will drag on until 2027.

The new estimates are contained in the September Oil Market Report, published by the IEA on September 11.

According to the new forecast, global oil supply in 2026 will drop by 5.7 million barrels per day - to 100.7 million barrels per day. Back in August, the IEA had expected a significantly smaller decline - by 4.3 million barrels per day, to about 102 million.

Thus, in just one month, the Agency increased its projected decline in supply by another 1.4 million barrels per day.

Actual production also deteriorated. In August, global oil supply fell by 1.6 million barrels per day - to 100.1 million. A significant part of the capacity of the Persian Gulf countries remains unavailable due to hostilities and shipping problems.

The main risk to the market remains the situation around the Strait of Hormuz. According to the IEA, normalization of oil flows from the region is now likely to last until 2027. Supplies are also pressured by threats to shipping in the Red Sea and disruptions to Russian oil exports after Ukrainian strikes on the Russian energy infrastructure.

At the same time, the IEA also significantly worsened its forecast for global demand. Now the Agency expects a drop of 2.5 million barrels per day in 2026 - to about 102.4 million barrels per day. The August forecast had envisaged a decline of only 1.6 million.

The weaker demand is primarily associated with high fuel prices and limited availability of oil products. At the same time, gasoline and diesel in many regions are rising in price faster than crude oil due to refining and supply problems.

For 2027, the IEA expects a market recovery: global demand may grow by about 2.6 million barrels per day, and supply by about 8 million barrels per day. However, this forecast depends on normalization of supplies from the Middle East and restoration of stable shipping along key routes.

For comparison, in the August report, the IEA expected that supply in 2027 would recover by 8.3 million barrels per day, and that disruptions in the oil market would begin to ease already at the end of 2026.

Based on materials: International Energy Agency, Financial Times, The Wall Street Journal