IEA warns 2026 oil supply gap will widen on delayed return of normal Gulf flows

The International Energy Agency (IEA) has warned that the global oil supply gap will widen beyond expectations in 2026, as the delayed return of normal Gulf flows due to the Iran war sends fuel prices soaring. Attacks on oil tankers in the Middle East have contributed to crude prices reaching US$110 a barrel for the first time since May.

However, the surge in diesel prices has reached record highs. The IEA now expects world oil supply in 2026 to fall by 5.7 million barrels per day, a 6% decrease, up from the previously anticipated 4% reduction. Global stocks have hit a record low, with a 3.1 million bpd drop in August. With diminishing inventories and a strained refining system, the need for Middle East conflict resolution is more urgent than ever to avoid further market tightening.

Demand is also falling more than expected, with world oil demand projected to decrease by 2.5 million bpd this year, exceeding the IEA's earlier forecast of a 1.6 million bpd drop.