Global 2026 oil supply shortfall to deepen as Hormuz reopening remains elusive
“Global oil supply has fallen well below demand” the IEA said in a monthly report
The International Energy Agency (IEA) reported on Aug 12 that global oil supply has fallen significantly below demand, projecting a 4.3 million barrels per day (bpd) decrease this year, or around 4%, due to ongoing conflicts in the Middle East. The US-Iran ceasefire ended last month, but attacks in the Strait of Hormuz and the Red Sea have resurfaced, exacerbating the supply deficit.
Additionally, the US has blocked Iranian exports, and Kazakh exports of blended crude have reduced. As a result, global supply is forecast to reach its lowest level of 102.02 million bpd this year, a drop of 1.27 million bpd from demand. Middle East oil loadings have dropped to 12 million bpd in July, 8.3 million bpd below pre-war levels.
The IEA expects a 1.8 million bpd deficit for July-September, marking the deepest quarterly deficit since the fourth quarter of 2021. For 2027, the agency anticipates a surplus of 4.61 million bpd if hostilities cease. OPEC expects demand to grow by 580,000 bpd this year, but this is 200,000 bpd less than previously anticipated.
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