PARIS: Global oil supply is expected to remain below overall demand this year as the US-Israel war involving Iran continues to disrupt energy production and shipping routes across the Middle East, the International Energy Agency (IEA) has warned in its latest monthly oil market report.
According to Reuters, the Paris-based agency said the conflict has caused severe disruptions to Gulf oil output and maritime transport, creating what it described as an “unprecedented supply shock” in global energy markets.
Global oil stocks are depleting at a record pace as supply losses from disruptions to flows via the Strait of Hormuz keep mounting
Producers & consumers are responding to the market signals, with Atlantic crude oil exports surging & refiners cutting runs: https://t.co/cOYraM4phx pic.twitter.com/QWJlPICebi
— International Energy Agency (@IEA) May 13, 2026
The IEA said restrictions on tanker movement through the Strait of Hormuz – one of the world’s most strategically important oil transit routes – have already led to cumulative supply losses exceeding one billion barrels.
More than 14 million barrels per day (bpd) of oil production are currently shut in across the Gulf region due to the ongoing hostilities and related logistical challenges.
Despite the sharp disruption, the agency’s base-case scenario assumes a gradual recovery in shipping activity through the Strait of Hormuz beginning in the third quarter of the year. However, it cautioned that uncertainty surrounding the conflict continues to pose significant risks to both energy security and the wider global economy.
The IEA now forecasts global oil supply to decline by approximately 3.9 million bpd in 2026 because of the war, a far steeper reduction than its earlier estimate of a 1.5 million bpd fall. The revised outlook reflects worsening regional instability and deeper-than-expected damage to production capacity and export infrastructure.
At the same time, global oil demand is also expected to weaken. The agency revised its demand forecast downward, saying worldwide consumption is now projected to decrease by 420,000 bpd this year, compared to its previous estimate of an 80,000 bpd decline.
The report noted that surging oil prices triggered by the conflict are contributing to “demand destruction”, as higher fuel costs weigh on industrial activity, transportation and consumer spending. The IEA also warned that slower global economic growth linked to rising energy prices could further reduce consumption in major importing economies.
The latest assessment underscores growing concerns over the broader economic consequences of the conflict, particularly for countries heavily reliant on Middle Eastern oil supplies and maritime trade routes.
