The International Energy Agency worsens its forecasts on the oil market
Tensions in Hormuz foreshadow a drop in supply and rise in prices
BarcelonaThe International Energy Agency (IEA) has substantially revised down its expectations for global oil demand and supply in 2026 due to the lack of an agreement to reopen the Strait of Hormuz. The current situation has shattered the positive expectations of a month ago, which will keep crude oil prices high, while reserves have fallen to their lowest levels since April 2025.
"New disruptions in the Strait of Hormuz have slowed the recovery of oil markets, underscoring the urgency to reopen it," stated the agency affiliated with the Organisation for Economic Co-operation and Development (OECD) in its August bulletin, where it warned that the markets for diesel, jet fuel, and gasoline have contracted due to the decrease in exports from Gulf countries and Russia, coinciding with the increase in travel demand during the summer.
The IEA forecasts that global oil demand will decrease by 1.6 million barrels per day (mb/d) in 2026, representing a drop of 510,000 barrels per day more than estimated a month ago, "due to the continued closure of the Strait of Hormuz and high fuel prices." Nevertheless, the agency is confident that the contraction will moderate as the year progresses: it will go from 4.9 mb/d in the second quarter of 2026 to 2.8 mb/d in the third, before resuming growth in the last quarter. Therefore, it anticipates that global oil demand will increase by 2.4 mb/d in 2027.
Regarding supply, while it highlights that it increased by 2.4 mb/d in July, reaching 101.5 mb/d, the IEA has stressed that it remained 6.3 mb/d below the previous year's levels, with 8.3 mb/d of Gulf production still paralyzed. "The resumption of hostilities and maritime disruptions in July and early August undermined recovery efforts," which is why it has cut its oil supply projection and now estimates an average decrease of 4.3 mb/d in 2026, to 102 mb/d, although it is confident in a rebound next year of 8.3 mb/d, reaching 110.3 mb/d.
Reserves are running out
For its part, observed global oil stocks plunged by 69 million barrels in July as a result of further supply disruptions from the Persian Gulf and Caspian Sea, causing a sharp decline in the volume of oil in transit.
Thus, by the end of July, observed stocks had fallen below 7.9 billion barrels for the first time since April 2025, after registering a cumulative reduction of 410 million barrels, or 2.7 mb/d, between late February and late July.
"While the market is expected to return to surplus towards the end of this year, risks remain considerable and the urgency to reopen the strait has increased as available stocks are rapidly depleting," the IEA warned.
