IEA forecasts 4.3 million bpd global oil supply fall in 2026 as Hormuz remains shut
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The International Energy Agency said on Wednesday it expects global oil supply to fall by 4.3 million barrels per day in 2026, citing the closure of the Strait of Hormuz and renewed Middle East hostilities. The projected drop would leave supply 1.27 million bpd below demand this year and create a 1.8 million bpd deficit in the third quarter. Meanwhile, Iran said there has been no progress in talks with the United States on reviving the June interim peace deal, according to Reuters.
IEA Supply Forecast
The International Energy Agency expects global oil supply to fall by 4.3 million barrels per day, or about 4%, in 2026, bringing total supply to 102.02 million bpd — its lowest forecast yet for the year. The agency cited the Strait of Hormuz shutdown, the U.S. blockade of Iranian exports, attacks in the Bab el-Mandeb Strait, and reduced Kazakh CPC Blend exports due to Black Sea drone attacks. The projected decline compares with a 3.7 million bpd fall forecast in July and would leave supply about 1.27 million bpd below demand this year, widening from an 860,000 bpd deficit implied by July forecasts.
Hormuz Standoff
Middle East oil loadings recovered to 20 million bpd at the start of July but dropped back to 12 million bpd later in the month. Middle East production was 8.3 million bpd below pre-war levels in July, compared with 14 million bpd of lost output at the crisis peak. The IEA projects a third-quarter oil market deficit of 1.8 million bpd, the deepest since the fourth quarter of 2021. Reuters reported on Aug. 12 that a senior Iranian source said there had been no progress in reviving the June interim peace deal; President Donald Trump called the deal 'over' on July 7, and Iran's foreign ministry declared it 'suspended' a week later. Iran said the strait will remain closed until the United States meets its demands and changes its 'behaviour', according to Al Jazeera.
Demand Revisions
The IEA now expects global oil demand to contract by 1.6 million bpd in 2026, steeper than the roughly 1 million bpd drop projected last month. OPEC also lowered its 2026 demand view but still sees oil use rising, the IEA report said. For 2027, the agency sees supply outstripping demand by 4.61 million bpd, assuming de-escalation in the coming months; that surplus could allow inventories to recover to their February 2026 level by mid-2027 after cumulative stock draws of 410 million barrels since the Iran war started.
What's Next
No date has been set for new U.S.-Iran negotiations after Tuesday's shipping attacks, Reuters reported. It remains unclear whether Tehran and Washington can restore the June interim agreement and reopen the Strait of Hormuz.
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IEA forecasts 4.3 million bpd global oil supply fall in 2026 as Hormuz remains shut
