IEA Deepens 2026 Oil Supply Cut Estimate to 4.3 Million b/d

The International Energy Agency (IEA) raised its estimate of the global oil supply decline in 2026 to 4.3 million barrels per day (b/d) on August 12, up from the 3.7 million projected in the July report. The revision reflects the absence of an agreement to reopen the Strait of Hormuz.

The IEA's monthly report projects that global supply will average 102 million b/d this year, with Gulf production still 8.3 million b/d below pre-conflict levels. The North Sea Dated benchmark closed July at $96.80 per barrel and was trading near $92 at the time of publication, after touching a high of $105 on July 23. Market reactions were already visible: according to Bloomberg Línea, Brent surpassed $87 on August 10 and Wall Street closed with losses amid diminished expectations of a quick agreement to reopen Hormuz. For Latin American economies that import crude and refined fuels, import costs are rising in an environment of refining margins at historic highs.

The report adds that global oil demand will fall 1.6 million b/d in 2026, 510,000 b/d more than estimated last month, and that the global balance will swing to a deficit of 1.8 million b/d in the third quarter, more than double what was projected in July. Observed inventories fell 69 million barrels that month and stood below 7.9 billion barrels. Atlantic refining margins reached historic highs on the back of rising diesel and jet fuel crack spreads. On currencies, the Mexican peso lost ground on August 10 alongside the Brazilian real and Chilean peso, according to Bloomberg Línea, as the cost of gasoline and diesel purchases rises for the region's net importers.

The IEA projects the market will return to surplus toward the end of 2026, but notes that inventory buffers are depleting and that the urgency to reopen Hormuz has increased. The September report will show whether the third-quarter deficit consolidates and how much deeper the annual supply decline runs.

This report was drafted with artificial intelligence assistance from verified sources and reviewed by a human editor before publication.