IEA Sees 5.7 Million Bpd Oil Supply Plunge as Gulf Recovery Slips to 2027

The International Energy Agency (IEA) has announced a significant 5.7 million barrels per day (bpd) reduction in global oil supply for 2026, citing a delayed recovery in Gulf oil production. The agency's report, released on Friday, states that global oil supply is now expected to decline by 5.7 million bpd in 2026, marking a 6% decrease from the 4.3-million-bpd decline forecasted just one month prior.

The delay in Gulf production recovery has pushed the return of normal Gulf supplies to 2027. August witnessed a 3.1 million bpd decrease in global oil stocks, leaving inventories at 7.8 billion barrels, their lowest level since 2023. In July, the IEA reported a cumulative inventory loss of 410 million barrels since the Iran war began in July 2022.

Saudi Arabia experienced the most substantial impact, with its crude supply plummeting by 2.3 million bpd in August to 6 million bpd, its lowest level in over three decades, following attacks on facilities and shipping routes. OPEC's production also dropped by 1.8 million bpd to 38.8 million bpd.

The IEA now anticipates a global oil consumption decline of 2.5 million bpd this year, a stark contrast to its August forecast of a 1.6-million-bpd contraction. Record fuel prices are causing consumers to reduce usage, particularly due to refinery disruptions that have tightened diesel and other product markets. Supply is disappearing at an accelerated rate, leaving the IEA nearly 2.9 million bpd away from OPEC's 2026 demand forecast.

The agency expects demand growth to reach 2.6 million bpd in 2027, aligning with OPEC's forecast of 2.36 million bpd.