Global oil inventories are set to tumble this quarter at more than twice the previously estimated rate, as renewed hostilities and maritime disruptions in the Middle East undermine efforts to boost supply, the International Energy Agency (IEA) said. The agency now projects a shortfall of 1.8 million barrels a day in the third quarter, more than double its last month's estimate. [source_ref:claim:22]
The IEA sharply reduced its global oil demand forecast for this year, citing the closure of the Strait of Hormuz and high prices, which are deterring buyers. Demand is expected to fall by 1.6 million barrels per day, compared with a one million bpd slump forecast in July.
IEA-projected global oil supply shortfall in the third quarter of 2026, more than double last month's estimate.
The ongoing closure of the Strait of Hormuz and elevated fuel prices continue to weigh on oil consumption, the IEA said in its monthly report. Global supplies rose by 2.4 million barrels per day in July to reach 101.5 million bpd, but that was still 6.3 million bpd lower than a year ago.
Renewed hostilities and maritime disruptions are undermining efforts to boost global oil supply.
Crude prices have remained well above levels seen before the US and Israeli attacks on Iran in late February, which sparked a war that has damaged oil infrastructure in several Gulf countries. Tehran responded by effectively shutting down tanker and cargo traffic in the Strait of Hormuz, through which around one-fifth of global oil supplies usually transit.
Supply contraction and the road to recovery
The IEA now expects global supply to fall by 4.3 million bpd on average this year, before recovering next year. It projects a return to growth in oil demand in the fourth quarter of this year, with a de-escalation in the conflict allowing a gradual recovery of flows and the possibility of a surplus by the final quarter of 2026.
Global oil stocks fell at the end of July to just under 7.9 billion barrels, the first time since April 2025, with a reduction of 410 million barrels since the war began, at a rate of 2.7 million per day. Data this week showed US crude oil stockpiles have fallen below 300 million barrels, the lowest level in more than four decades.
The IEA and OPEC published sharply conflicting views of 2026 oil demand. The IEA now expects the world to burn less oil in 2026 than in 2025, its first such call since Covid-19, forecasting a decline of 1.6 million bpd. OPEC still expects growth, though it has trimmed its estimate to 580,000 b/d from 780,000 b/d. The two agencies' forecasts imply a difference of about 2.2 mb/d in what the world will burn in 2026.
