The International Energy Agency (IEA) says global oil supply is now expected to fall short of demand this year, reversing earlier projections of a surplus. The shift comes as ongoing conflict involving Iran continues to disrupt oil production and transport across the Middle East.
According to the IEA, damage to key oil infrastructure and restrictions on tanker movement through the Strait of Hormuz have resulted in a major supply shock. The agency estimates that more than 14 million barrels of oil per day have been shut in, contributing to significant market tightening.
The report adds that global oil inventories are being drawn down at an unprecedented rate as importing countries struggle to offset supply disruptions. It also warns that the market is likely to remain in deficit through much of 2026, even if conditions begin to stabilize later in the year.
While a gradual recovery is expected if shipping routes through the Strait of Hormuz resume, the IEA cautions that the current disruption could heighten price volatility, particularly ahead of peak global demand periods.