International Energy Agency cuts 2026 oil forecast

• The International Energy Agency reported a global oil supply shortfall of 1.8 million barrels per day alongside an increased demand contraction of 1.6 million barrels per day for 2026.
• Global crude inventories have dropped significantly, with the US Strategic Petroleum Reserve hitting its lowest level since 1983.
• The organisation stated that ongoing maritime disruptions through the Strait of Hormuz continue to drive the downward forecast revisions.

Global oil demand is projected to decline by 1.6 million barrels per day in 2026 due to ongoing disruptions in the Strait of Hormuz.

This updated outlook exceeds last month's forecast for a 510,000 barrel decline and marks the largest annual demand drop since the COVID-19 pandemic.

Global crude supply is expected to fall roughly 4% to an average of 4.3 million barrels per day across the year.

The Strait of Hormuz normally carries about 20% of the world's oil supply, though alternative pipeline routes and shuttle tankers have absorbed some volume.

"Although the market is projected to return to surplus towards the end of this year, risks remain substantial and the urgency of reopening the Strait has increased, as previously available inventory buffers are rapidly depleting," the International Energy Agency said.

Crude stockpiles continue to shrink globally, and the US Department of Energy reported that its Strategic Petroleum Reserve fell to its lowest level since 1983.

Abu Dhabi's state oil company has offered to transport Iraqi oil through the waterway using short-distance shuttle tankers to bypass blocked zones.

Meanwhile, market analysts continue to monitor monthly reports from energy bodies to assess future inventory recovery timelines.