The International Energy Agency has slashed its 2026 global oil supply forecast to the lowest level of the year, following the continued closure of the Strait of Hormuz and attacks in the Bab Al Mandeb strait.
The IEA is now projecting a 4.3 million barrel-per-day decline, 600,000 bpd deeper than it forecast a month ago.
In its closely watched monthly oil market report released on Wednesday, the Paris-based agency said the global supply is expected to average 102 million bpd this year.
The agency tied the outlook for the rest of 2026 directly to a resolution of the conflict and the reopening of key shipping routes.
“With an agreement enabling the reopening of Hormuz and unhindered transit through the Bab Al Mandeb strait still elusive, we have again lowered supply estimates for the rest of the year,” the IEA said.
The crisis, which the agency called “the largest global oil supply disruption ever”, has “unsurprisingly exposed vulnerabilities in the energy security of oil-importing countries”, the report said.
Gulf producers managed to raise output in July even as their ability to get barrels to market deteriorated sharply. Regional production rose 2.5 million bpd to 23.9 million bpd, the IEA said, but remained 8.3 million bpd below levels seen before the conflict began.
Combined shipments through Hormuz and alternative pipeline routes fell 2.1 million bpd to 15 million bpd after the key waterway was effectively closed again in early July and oil infrastructure and tankers came under attack.
The Bab Al Mandeb strait, which links the Red Sea with the Gulf of Aden, emerged as a second flashpoint. Flows through the waterway “collapsed in July”, the IEA said, as attacks on shipping intensified alongside the renewed Hormuz blockage.
The UAE also saw its production of all crude and liquids hit by the Iran war disruption. Output fell 190,000 bpd to 4.7 million bpd in July, including 3.9 million bpd of crude, “as attacks on shipping limited offtake and offshore supply from the Das and Zirku Islands”, the IEA said.
Qatar faces a larger hit over the full year. The agency estimates close to 910,000 bpd of losses in Qatar in 2026 as regional risks persist. This is the largest annual supply loss cited among producers outside the core conflict zone.
Among individual producers, Kazakhstan suffered the sharpest month-on-month decline. Renewed Ukrainian attacks on Black Sea ports and tankers forced a temporary closure of the Caspian Pipeline Consortium terminal, leaving Kazakh production 330,000 bpd lower in July, the IEA said.
