(WO) — Global oil supply is forecast to fall 5.7 MMbpd in 2026 as prolonged Middle East disruptions delay a recovery in Gulf production until next year, the International Energy Agency (IEA) said in its September Oil Market Report.
The IEA now expects world oil supply to average 100.7 MMbpd this year, 1.3 MMbpd below its previous forecast. Global production fell 1.6 MMbpd month-over-month in August to 100.1 MMbpd, with more than 10 MMbpd of Gulf production remaining shut in amid heightened security risks. Supply is forecast to rebound by 8 MMbpd in 2027.
Outside OPEC+, the agency expects the “Americas Quintet” to dominate production growth, adding 1.4 MMbpd in 2026 and another 1 MMbpd next year.
The IEA also sharply lowered its demand outlook, forecasting global oil consumption will decline by 2.5 MMbpd in 2026, a drop 940,000 bpd steeper than projected in its August report. Demand is expected to rebound by 2.6 MMbpd in 2027.
The agency attributed the weaker outlook to continued disruptions to oil and refined product flows, along with sharply higher fuel prices. Gulf oil exports averaged about 13 MMbpd in August, nearly half their pre-war level, while refined product and LPG exports remained about 3.7 MMbpd below February levels.
Global inventories are also tightening. Observed oil stocks fell another 95 million bbl in August, bringing cumulative draws since February to 507 million bbl, equivalent to an average 2.8 MMbpd. Oil held on water declined by 65 million bbl during August as renewed tanker attacks reduced Middle East traffic.
Crude prices have risen sharply alongside the supply disruptions. North Sea Dated averaged $91/bbl in August before reaching $113.48/bbl on Sept. 9, while tightening crude supplies pushed market backwardation to extreme levels, according to the IEA.
“Buffers [are] shrinking and the global refining system [is] stretched to the limit,” the agency said, warning that continued disruptions risk further market tightening and demand destruction.
About The Author
