Global Oil Deficit To Hit 1.8 Million Bpd This Quarter, IEA Forecasts

The IEA slashed its 2026 global oil supply forecast, with output now expected to plunge 4.3 million barrels per day this year as the failure to reopen the Strait of Hormuz pushes the market deeper into deficit, OilPrice reported.

The latest forecast is considerably worse than the 3.7-million-bpd decline the agency projected just last month and would leave global supply at 102.02 million bpd, its lowest forecast for 2026 yet.

Supply is now expected to fall 1.27 million bpd short of demand for the year, compared with an 860,000-bpd deficit implied by the IEA’s July forecasts.

The squeeze will be even more severe this quarter. The IEA now expects a 1.8-million-bpd deficit between July and September, a 1-million-bpd downward revision from July and the deepest quarterly oil deficit since the fourth quarter of 2021.

According to the IEA, Middle East oil flows briefly returned to pre-war levels in early July, with loadings reaching 20 million bpd, before falling to 12 million bpd later in the month. Middle East production remained 8.3 million bpd below pre-war levels in July.

The IEA cited the Hormuz shutdown, the U.S. blockade of Iranian exports, attacks in the Bab el-Mandeb Strait and reduced Kazakh CPC Blend exports among the forces keeping global supply below demand.

The supply shock is also destroying demand, with the IEA now expecting global oil consumption to contract by 1.6 million bpd this year, compared with a roughly 1-million-bpd decline forecast in July, as high prices and restricted supplies of refined fuels force consumers to cut consumption, particularly in Asia and the Middle East.

Refining is also becoming a major constraint, with global crude processing falling 5 million bpd year-over-year in July, while Russian refinery runs remained near a 20-year low of 3.9 million bpd following Ukrainian drone attacks. Russian fuel exports plunged to 1.4 million bpd, nearly half their July 2025 level.

The prolonged shortage is eating away at inventories. The IEA estimates global stocks have fallen by 410 million barrels since the Iran war began, while observed inventories dropped below 7.9 billion barrels in July for the first time since April 2025.

The agency forecasts supply could exceed demand by 4.61 million bpd in 2027, but that outlook assumes Middle East hostilities de-escalate and disrupted oil flows recover.

The latest IEA assessment adds to evidence challenging U.S. claims that Middle East oil flows have returned to normal. Energy Secretary Chris Wright said Tuesday that total regional oil flows were averaging about 15 million bpd and exceeded pre-war levels on Sunday. Kpler said its vessel-tracking data could not be reconciled with those figures, while the EIA said Hormuz transits remain severely constrained.