IEA warns 2026 oil supply gap will widen

Business Recorder reported that the International Energy Agency now expects world oil supply to contract by 5.7 million barrels a day in 2026, roughly 6 percent, up from an earlier estimate of a 4 percent drop. The agency blamed slow progress in ending the Middle East conflict, which is postponing the resumption of normal Gulf exports into 2027 and pushing fuel prices higher. Its monthly report came out on Friday.

Crude moved toward $110 a barrel this week, the first time since May, as attacks on tankers along Middle East shipping routes intensified. Refined products have climbed even more sharply, with diesel hitting record highs as damage to refineries from the regional conflict and the Russia-Ukraine war adds strain. Demand is weakening under the burden of expensive fuel, yet supply is dropping faster, so global inventories fell 3.1 million bpd in August to their lowest since 2023.

Saudi crude supply shrank 2.3 million bpd in August, leaving it at 6 million, its weakest reading in more than 3 decades, after facilities and shipping lanes were hit. The agency now sees world demand dropping 2.5 million bpd this year, deeper than its earlier 1.6 million bpd estimate, while it and OPEC both foresee a rebound in 2027.