IEA cuts 2026 oil supply forecast on Strait of Hormuz uncertainty

The International Energy Agency (IEA) has reduced its forecast for global oil supply growth by 2026, citing persistent uncertainty over the reopening of the Strait of Hormuz as a key factor.

In its latest medium-term oil market report, the IEA projected that supply growth would lag behind demand by roughly 1 million barrels per day (bpd) by 2026, down from prior estimates. The agency attributed the downward revision to delays in restoring full operational capacity at the Strait of Hormuz, a critical chokepoint for global oil transit.

The Strait of Hormuz, through which about 20% of the world’s seaborne oil passes, has faced intermittent disruptions in recent years due to geopolitical tensions. The IEA noted that while some progress has been made toward stabilizing the region, the timeline for a full reopening remains unclear, exacerbating supply-side risks.

The forecast reduction comes as global oil demand is expected to rise by around 1.2 million bpd annually through 2026, driven by post-pandemic economic recovery and industrial activity in emerging markets. However, the IEA emphasized that supply constraints, particularly in non-OPEC regions, could limit the ability to meet this demand growth.

Oil prices have reacted modestly to the report, with Brent crude futures holding near $85 per barrel in early trading. Analysts suggest that the IEA’s warning underscores the fragility of the current supply-demand balance, even as OPEC+ continues to manage production cuts to support prices.

The agency also highlighted the role of non-OPEC supply growth, particularly from the U.S., Brazil, and Guyana, in offsetting some of the deficits. However, it cautioned that delays in infrastructure projects or further geopolitical escalations could widen the supply gap.

The IEA’s revised outlook adds to concerns about energy security, particularly in Europe and Asia, where reliance on Middle Eastern oil remains high. Policymakers and industry stakeholders are expected to closely monitor developments in the Strait of Hormuz and other key supply routes in the coming months.