IEA Warns Oil Supply Deficit Deepens on Hormuz Risk

Written by Sandra Leggero

Sandra Leggero has a background in financial markets, having spent more than 9 years in commodities trading for several European and Asian companies. She holds a degree in Economics from the University of Pavia and specializes in emerging markets.

, | Updated: May 13, 2026

Key Moments

The International Energy Agency now projects a 3.9 million bpd drop in global oil supply in 2026, assuming Strait of Hormuz flows gradually resume from June.
The IEA forecasts world oil supply to undershoot demand by 1.78 million bpd in 2026, reversing its prior expectation of a 0.41 million bpd surplus.
WTI Oil traded almost 1% lower near $97.50 with no clear price reaction following the release of the IEA projections.

IEA Revises Global Oil Supply Outlook

According to the International Energy Agency (IEA), the global oil market is expected to tighten significantly in 2026 as supply disruptions continue to reverberate through the system. In its latest assessment, the IEA estimates that world oil supply will be 3.9 million barrels per day (bpd) lower in 2026, on the assumption that crude flows through the Strait of Hormuz – a key transit route for nearly 20% of global energy supply – will gradually restart from June. This compares with a previous forecast of a 1.5 million bpd decline.

Widening Supply-Demand Imbalance

In its monthly report, the IEA now anticipates that total world oil supply in 2026 will be 1.78 million bpd below projected demand. This marks a sharp shift from the agency’s prior view, which had supply exceeding demand by 0.41 million bpd.

At the same time, the IEA expects world oil demand in 2026 to fall by 420,000 bpd due to the Iran war, a steeper contraction than the previously forecast 80,000 bpd reduction.

IEA Metric for 2026	Latest Projection	Previous Projection
Change in world oil supply	-3.9 million bpd	-1.5 million bpd
Supply vs. demand balance	1.78 million bpd lower than demand	0.41 million bpd higher than demand
Change in world oil demand	-420,000 bpd	-80,000 bpd

Impact of Strait of Hormuz Closure and Regional Conflict

The closure of the Strait of Hormuz has resulted in a cumulative global supply loss of 12.8 million bpd since February, according to the IEA. The agency links this disruption, alongside the broader war in the Middle East, to mounting pressure on global oil balances.

Global oil refinery runs are expected to decline by 1.6 million bpd across 2026, a development the IEA attributes to attacks, reduced crude availability, and export restrictions.

The IEA reports that the war in the Middle East is draining global oil inventories at a record rate, citing drawdowns of 246 million barrels during March and April.

Market Response: WTI Oil Moves Lower

Despite the materially tighter outlook sketched by the IEA, the immediate reaction in crude benchmarks has been muted. There was no visible reaction by the WTI Oil price after the release of the new projections. As of writing, the WTI Oil price is down almost 1% to near $97.50.