"IEA" expects worsening global oil supply crunch in 2026
Amman2 min read
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The International Energy Agency (IEA) said on Friday that both global oil supply and demand will fall more than previously expected this year, as a lack of progress toward ending the Iran war delays the return of Middle East oil flows to normal levels until 2027, pushing fuel prices higher.
Increased attacks on oil tankers in Middle East shipping lanes helped push crude prices toward $110 a barrel this week for the first time since May. However, this increase was overshadowed by the sharp rise in fuel prices, such as diesel, which hit record levels, according to CNBC.
The agency said global oil supply in 2026 is now expected to fall by 5.7 million barrels per day, or about 6 percent, compared to previous forecasts that indicated a decline of about 4 percent. With supplies tightening, the world is consuming inventories at a record pace.
The agency added that global inventories fell by 3.1 million barrels per day in August.
In its monthly report, the agency stressed that "inventories have so far played a crucial role in balancing the market."
The agency, which advises industrial countries, added: "With buffer stocks shrinking and the global refining system reaching full capacity, the need to make progress in resolving the conflict in the Middle East and the Russia-Ukraine war, which has entered its fifth year, is greater than ever to avoid worsening the supply crunch in the market."
It also said demand is falling more than expected, driven in part by unprecedented fuel prices.
Global oil demand is expected to drop by 2.5 million barrels per day this year, compared to the agency's previous forecast of a 1.6 million barrels per day decline.
