DBT Bureau
Pune, 12 August 2026
The IEA sharply reduced its 2026 global oil supply forecast as renewed Middle East hostilities and the continued Strait of Hormuz shutdown disrupt crude flows. Global supply is now expected to fall by 4.3 million barrels per day to 102.02 million bpd, creating a projected 1.27 million bpd deficit against demand. Middle East oil loadings dropped to 12 million bpd in late July from 20 million bpd earlier. The IEA expects a 1.8 million bpd deficit during July-September, the deepest quarterly shortfall since late 2021. However, assuming de-escalation, a 4.61 million bpd surplus is projected for 2027.
Key Highlights
- IEA cut its 2026 global oil supply decline forecast to 4.3 million bpd from 3.7 million bpd.
- Global oil supply is projected at 102.02 million bpd, creating a 1.27 million bpd deficit.
- Middle East oil loadings dropped to 12 million bpd from 20 million bpd earlier in July.
- IEA expects a 1.8 million bpd oil deficit during July-September, deepest since Q4 2021.
- Russian fuel exports plunged nearly 50% year-on-year to 1.4 million bpd in July.
Crude oil prices are likely to remain supported as the IEA sharply lowered its 2026 global supply forecast amid renewed Middle East hostilities and persistent disruptions around the Strait of Hormuz. The agency now expects global oil supply to decline by 4.3 million barrels per day, or around 4%, this year, compared with its previous forecast of 3.7 million bpd. Total supply is projected at just 102.02 million bpd, creating a supply deficit of around 1.27 million bpd against demand.
The tightening outlook is primarily linked to the continued shutdown of the Strait of Hormuz, the U.S. blockade of Iranian exports, attacks around the Bab el-Mandeb Strait and lower Kazakh CPC Blend exports. Renewed tanker attacks and Houthi activity have further complicated regional trade flows.
Middle East oil loadings initially recovered to around 20 million bpd at the beginning of July, broadly matching pre-war Hormuz traffic, but subsequently fell to 12 million bpd. Middle East production remained 8.3 million bpd below pre-war levels in July, highlighting the scale of supply disruption.
The IEA expects the global oil market to record a 1.8 million bpd deficit during July-September, revising the previous estimate downward by 1 million bpd. This would represent the deepest quarterly deficit since Q4 2021, potentially providing further support to crude prices.
Refined-product disruptions are also tightening markets. Global refinery processing fell by 5 million bpd year-on-year in July, while Russian fuel exports dropped nearly half from a year earlier to 1.4 million bpd.
Persistent Hormuz disruptions, Middle East supply losses and refinery constraints should keep crude prices supported, although de-escalation could trigger a significant supply surplus next year.
Source: Kedia Stocks & Commodities Research Pvt. Ltd.
