The International Energy Agency (IEA) warns that the oil market deficit may persist through 2026 amid the ongoing Gulf conflict. The global oil market will remain in deficit until the final quarter of the current year as production sharply falls in Gulf countries, the IEA said on Wednesday.
According to the IEA, global oil supply declined by a further 1.8 million barrels per day (bpd) in April to 95.1 million bpd, taking total losses since February to 12.8 million bpd.
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The IEA attributes the decline to the ongoing conflict in the region, which has triggered unprecedented oil supply losses and tightened global markets.
1 billion barrels, with more than 14 million bpd of oil now shut in.
Assuming flows through the Strait of Hormuz gradually resume from June, global oil supply is projected to decline by an average 3.9 million bpd to 102.2 million bpd in 2026.
On the demand side, refiners have reduced runs and sharply scaled back crude imports, with Chinese seaborne crude imports falling by 3.6 million bpd from February to April, according to Kpler.
Major reductions in imports were also seen in Japan at 1.9 million bpd, South Korea at 1 million bpd, and India at 760,000 bpd, the IEA said.
The slowdown in global refinery activity, by around 5 million bpd year-on-year (YoY) in April, has temporarily eased tensions in the crude market, but tightness is quickly spreading to product markets.
Global Oil Demand Forecast
The IEA expects global oil demand to contract by 2.4 million bpd YoY in the second quarter of 2026 and decline by 420,000 bpd for the year as a whole, 1.3 million bpd weaker than its pre-conflict forecast.
The steepest losses are being witnessed in the petrochemical sector, where feedstock availability is becoming increasingly constrained.
The IEA report was released on Wednesday at 7:50 PM IST from its office in Paris.
A meeting room on the 3rd floor of the IEA headquarters was filled with reporters and analysts as the report was being discussed.
The conflict in the Gulf region has led to a significant decline in oil production, resulting in a shortage of oil supplies globally.
Oil Market Impact
The oil market deficit is expected to persist through 2026, with the IEA warning of tightness in product markets and a decline in global oil demand.
The situation is being closely monitored by the IEA and other international organizations, with a focus on finding a resolution to the conflict and restoring oil production in the region.
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