Global oil supply is projected to decline sharply in 2026 due to Middle East tensions and reduced refinery runs, widening the supply-demand gap.
The International Energy Agency revised its 2026 oil supply forecast downward, projecting a 3.9 million barrels per day decline, up from a prior estimate of 1.5 million bpd. The adjustment assumes gradual resumption of oil flows through the Strait of Hormuz, a critical chokepoint for nearly 20% of global supply, starting in June.
The agency now expects global oil supply to fall 1.78 million bpd below demand in 2026, reversing a previous forecast of a 0.41 million bpd surplus. Demand is also projected to drop by 420,000 bpd, driven by the Iran conflict, compared to an earlier estimate of an 80,000 bpd decline. Total supply losses from Hormuz closures since February have reached 12.8 million bpd.
Refinery runs are expected to decline by 1.6 million bpd in 2026 due to attacks, lower crude availability, and export restrictions. The IEA noted that Middle East tensions have accelerated inventory drawdowns, with 246 million barrels depleted in March-April alone. WTI crude prices showed no immediate reaction, trading near $97.50, down nearly 1% on the day.