IEA cuts 2026 oil outlook as Iran and Ukraine wars strain refiners
The International Energy Agency slashed its 2026 global oil outlook on Friday as escalating wars in Iran and Ukraine pushed global refining capacity to its limits and depleted emergency stockpiles.
Refining bottlenecks and output cuts
The Paris-based agency now projects global crude supply will drop by 5.7 million barrels per day (bpd) in 2026, representing an approximate 6% annual decline and deepening the 4% contraction forecast in August. A full recovery in Middle Eastern crude flows has now been deferred until 2027, according to IEA data cited by CNBC.
Global demand projections were downgraded in tandem. Worldwide oil consumption is now anticipated to contract by 2.5 million bpd this year, down sharply from the 1.6 million bpd drop predicted last month.
Diplomatic gridlock between Washington and Tehran, renewed attacks across the Strait of Hormuz, and persistent maritime instability in the Bab el-Mandeb Strait continue to disrupt global supply corridors.
Depleted inventories and market strains
While emergency stockpiles previously buffered global markets, that safety cushion is depleting rapidly. Observed global crude reserves have tumbled by 507 million barrels since the onset of hostilities, including a 95-million-barrel drop in August alone.
“With falling reserves and the global refining system pushed to the limit, the need for progress in resolving the Middle East conflict and the Russia-Ukraine war is greater than ever to avoid further market tightening and demand destruction,” the IEA warned.
Refineries processed approximately 81.4 million bpd in August—a year-on-year drop of 4.2 million bpd—hampered by operational disruptions across the Middle East, Russia, and key Asian economies.
Crude prices retreated slightly on Friday, with Brent dropping 3% to $104.44 per barrel and West Texas Intermediate falling 2.6% to $99.86. Both benchmarks remain anchored near the $100 threshold amid persistent infrastructure risks and shipping disruptions.
Translation by Iurie Tataru
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