IEA slashes oil supply forecast

The International Energy Agency (IEA) released its monthly oil market report on August 12, 2026, sharply cutting its global oil supply forecast for 2026 by 4.3 million barrels per day (bpd), or about 4%, to 102.02 million bpd. This is the lowest forecast yet for the year and a downward revision from the 3.7 million bpd drop projected in July. The revision is driven by renewed Middle East hostilities following the breakdown of the U.S.-Iran ceasefire, which led to resumed tanker attacks in the Strait of Hormuz and Houthi attacks in the Red Sea. The IEA now expects a global supply deficit of 1.27 million bpd this year, widening from 860,000 bpd, and a third-quarter deficit of 1.8 million bpd, the deepest since Q4 2021. Middle East oil loadings fell from 20 million bpd in early July to 12 million bpd later in the month, with production 8.3 million bpd below pre-war levels. The IEA also cut its global oil demand forecast to a contraction of 1.6 million bpd this year, citing restricted refined product supplies and higher prices. Russian refining remains near a 20-year low due to Ukrainian drone attacks, while crude exports hit a record high. The agency projects a surplus of 4.61 million bpd next year if de-escalation occurs.