Global Oil Supply Has Dropped 12.8 Million Barrels a Day – No Quick Fix Ahead?
The International Energy Agency (IEA) stated international oil markets will stay severely undersupplied by means of the tip of the third quarter of 2026, even when the US-Iran battle ends by early June.
The oil shock from the struggle has destabilized markets, prompting many nations to take measures to preserve gasoline.
Why a Firm Ceasefire Will Not End the Oil Shock
In its newest report, IEA highlighted that international oil provide has fallen by 12.8 million barrels per day since hostilities started. Output from Strait of Hormuz countries is down 14.4 million barrels per day from pre-war ranges.
The company’s knowledge factors to a 1.78 million bpd shortfall in 2026. That marks a sharp reversal from the 410,000 bpd surplus estimated in final month’s outlook and the practically 4 million bpd oversupply forecast in December.
The IEA base case assumes that flows by means of the strait will gradually resume from June. Even so, the supply-demand hole reaches 6 million bpd from March to June.
The company made the purpose immediately in its May report.
“The market will stay severely undersupplied by means of the tip of 3Q26, even assuming the battle ends by early June (our base case),” the report learn. “Supply begins a gradual restoration from 3Q26 however doesn’t meet up with demand till October when the stability edges into a modest surplus. That overhang barely begins to offset the inventory deficit amassed since end-February.”
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The company additionally tasks a cumulative oil liquids deficit of 900 million barrels by September 2026. That determine consists of the IEA’s coordinated launch of 400 million barrels, leaving round 500 million barrels to be lined by means of business inventory attracts.
Restoring these inventories, together with strategic reserves, would doubtless require an extra 1 million barrels per day of provide past anticipated demand development over the following three years. While a lot of the deficit is concentrated in crude oil, tight refined product inventories may additional complicate replenishment efforts.
The IEA additionally tasks demand will decline by 420,000 barrels per day this yr, versus its earlier estimate of a modest 80,000 bpd lower.
“With demand weak point solely partly offsetting the massive provide shortfall, inventories hold falling till the ultimate quarter of the yr when a modest projected surplus begins to rebuild depleted shares – leaving market tight properly past 2026,” the IEA added.
Earlier, HFI Research stated the oil market had already crossed its breaking level by mid-April, whereas warning that logistical bottlenecks may gradual the tempo of any restoration.
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