- Global oil demand falls by 1.1 million barrels per day in 2026 amid US-Iran conflict (previous forecast for a decline of 420,000 barrels per day)
- Global oil supplies will decline by 3.9 million barrels per day in 2026 (unchanged from previous forecast)
- Supply growth in 2027 is seen by 8 million barrels per day and demand growth by 2 million barrels per day
- This leaves a “significant burden” of more than 5 million barrels per day on the oil market
- The US-Iran deal could put an end to the largest oil supply disruption in history
- However, operational and political constraints leave downside risks to the Middle East outlook despite the agreement
It may be a bit quick to assume that normalcy will resume, but the IEA believes that ample supply will return to the market soon enough.
They expect a gradual recovery in the oil market to begin before some normalization occurs that would tip the scales in favor of achieving a large surplus next year.
I won’t claim that this is a reasonable assumption, but again, baby steps. First, let’s see how this 60-day deal holds up. More importantly, will the reopening of the Strait of Hormuz see a significant increase in traffic flows? Or will it follow the more disturbing rules of the game below:
