IEA warns global oil supply shortfall will deepen in 2026
✧ GENERATE BRIEFING +
The International Energy Agency has warned that the global oil supply gap will widen through 2026 due to ongoing Middle Eastern disruptions, projecting global production to decline by 5.7 million barrels per day to approximately 100.7 million barrels per day. With more than 10 million barrels per day of Gulf production remaining offline in August and global output falling month-on-month to 100.1 million barrels per day, expected supply recoveries have been delayed into 2027. Global observed oil stocks dropped by 95 million barrels in August, pushing cumulative withdrawals since February to 507 million barrels. Consequently, global consumption is expected to contract by 2.5 million barrels per day in 2026, while benchmark North Sea Dated crude surged to $113.48 per barrel on September 9, driven by shrinking inventories, restricted shipping routes, and record Atlantic Basin refining margins.
LONDON: The International Energy Agency (IEA) has warned that the global oil supply gap is likely to widen this year as disruptions in the Middle East delay the restoration of normal energy flows.
In its latest Oil Market Report, the agency projected global oil production to decline by 5.7 million barrels per day in 2026, taking total supply to approximately 100.7 million barrels per day. The forecast represents a sharper contraction than the IEA’s previous estimate.
The agency attributed the downgrade mainly to the continuing disruption of Gulf energy exports, attacks on oil infrastructure and uncertainty surrounding the resumption of shipping through key regional routes. More than 10 million barrels per day of Gulf production remained offline in August because of heightened security risks.
Global oil output fell by 1.6 million barrels per day month-on-month in August to around 100.1 million barrels per day. The IEA said the expected recovery in Gulf production has now been pushed into 2027, increasing pressure on already depleted inventories.
The supply disruption has also affected global oil demand. The IEA expects oil consumption to decline by 2.5 million barrels per day in 2026, a steeper fall than its earlier forecast. Demand is projected to recover by 2.6 million barrels per day in 2027 as energy flows gradually normalise.
Oil inventories continued to decline sharply, with global observed stocks falling by 95 million barrels in August. Cumulative stock withdrawals since February reached approximately 507 million barrels, highlighting the limited buffers available to absorb further supply shocks.
The agency also reported that refinery operations remained below last year’s levels, while diesel markets faced particularly strong pressure. Refining margins in the Atlantic Basin reached record levels in August, reflecting shortages of refined products and increased transportation costs.
Benchmark oil prices surged during the reporting period, with North Sea Dated crude reaching $113.48 per barrel on September 9. The IEA warned that continued geopolitical uncertainty, restricted shipping routes and delayed diplomatic progress could keep oil markets volatile in the months ahead.
