IEA Warns of Widening Oil Supply Gap in 2026 Amid Iran Conflict
The International Energy Agency has revised its outlook, predicting a sharper decline in global oil supply and demand for 2026 due to the ongoing war in Iran. With crude prices nearing US$110 per barrel and diesel hitting record highs, inventories are depleting rapidly.
The International Energy Agency (IEA) announced on Friday that global oil supply and demand are expected to fall more significantly than previously forecast this year. The agency attributes this downward revision to a lack of progress in ending the conflict in Iran, which continues to disrupt market stability.
Market pressures have intensified throughout the week, with crude oil prices approaching US$110 per barrel for the first time since May. This surge is partly driven by increased attacks on oil tankers within Middle East shipping routes. Concurrently, prices for refined fuels such as diesel have reached record highs, reflecting the strain on the global refining system.
According to the IEA’s updated projections, world oil supply in 2026 is now expected to decline by 5.7 million barrels per day, representing an approximate 6% drop. This figure exceeds the previous estimate of a 4% decrease. Meanwhile, global oil stocks fell by 3.1 million barrels per day in August, indicating that the world is consuming its inventories at a record pace.
On the consumption side, world oil demand is projected to drop by 2.5 million barrels per day this year, surpassing the earlier forecast of a 1.6 million bpd decline. The agency emphasized the urgent need for progress in resolving conflicts in both the Middle East and Russia-Ukraine regions to prevent further tightening of the oil market.