According to the International Energy Agency (IEA), global oil supplies will continue to fall short of demand until the end of September 2026, even if tensions between the US and Iran ease up in early June.
The war caused a sharp rise in oil prices, which has disrupted markets and led many countries to implement fuel-saving strategies.
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According to a recent report, the IEA notes that global oil production has decreased by 12.8 million barrels per day since the start of the conflict. Countries in the Strait of Hormuz have seen an even larger drop in output, with production down 14.4 million barrels per day compared to before the war.
The agency’s latest data now predicts a shortage of 1.78 million barrels per day in 2026. This is a significant change from their previous forecast last month, which showed a surplus of 410,000 barrels per day, and a much larger oversupply of nearly 4 million barrels per day back in December.
According to the IEA’s main forecast, oil flows through the strait are expected to slowly return to normal starting in June. However, even with this recovery, there will still be a shortage of 6 million barrels per day between March and June.
The agency made the point directly in its May report.
According to the report, the market will face a significant shortage of supply until the end of September 2026, even if the current conflict resolves in early June, as we currently expect. While supply will gradually increase starting in October 2026, it won’t meet demand until then, resulting in only a small surplus. This small surplus will only begin to make up for the large supply shortage that has built up since the end of February.
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The agency forecasts a shortfall of 900 million barrels of oil by September 2026. This takes into account the 400 million barrels released from coordinated reserves, meaning the industry will need to cover the remaining 500 million barrels by reducing its existing stockpiles.
Refilling depleted oil reserves will probably require an extra 1 million barrels of oil production each day for the next three years, on top of how much oil is already expected to be used. The biggest shortage is in crude oil, but low supplies of gasoline and other refined products could make rebuilding reserves even harder.
The International Energy Agency now expects oil demand to fall by 420,000 barrels per day this year, a significant increase from their previous forecast of an 80,000 barrel per day decrease.
In my analysis, despite some decrease in demand, supply is still significantly lower. This is causing inventories to decline throughout most of the year. We’re projecting a small surplus starting in the last quarter, which will begin to replenish those depleted stocks, but overall, the market is expected to remain tight well into 2026 and beyond.
HFI Research previously stated that the oil market weakened significantly by mid-April. They also cautioned that problems with transportation and delivery could hinder any future improvement.
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2026-05-14 14:59