Oil wraps up strong weekly gain with no progress toward Middle East peace

The International Energy Agency has revised its 2024 global oil supply forecast downwards by 4.3 million barrels per day, citing the intensification of the Middle East conflict. The agency predicts a 4% reduction in global oil supplies this year due to the ongoing tensions in the region. In its latest report, the IEA highlighted the possibility of the Strait of Hormuz remaining closed and the Bab al-Mandab Strait remaining obstructed, leading to the downward adjustment of its supply estimates.

The agency emphasized that without an agreement to reopen these strategic passages, the global oil market deficit is expected to widen further. Anticipating the worst, the IEA anticipates the largest yearly deficit in five years for 2024, projecting a shortfall of 4.3 million barrels per day. This forecast is a significant increase from the 3.7 million barrels per day estimate provided in the July report, and it brings the total supply to the lowest level the agency has ever projected this year, amounting to 102.02 million barrels per day.