The International Energy Agency (IEA) has revised its 2026 global oil demand forecast, now expecting a decline of 1 million barrels per day—slightly less than the 1.1 million-barrel drop it projected in mid-June. In its latest monthly report, the IEA noted that ‘demand recovery is underway’ following May’s low point.
Supply Constraints Persist Amid Geopolitical Tensions
Global oil supply rebounded partially after the June 17 ceasefire agreement eased disruptions in the Strait of Hormuz, a critical maritime chokepoint. However, output remains significantly below pre-war levels in the Middle East. Since then, shipping through the Strait—particularly along the UN-supported Omani sea route—has slowed markedly due to ongoing attacks on vessels and heightened tensions between Iran and the United States.
The IEA reported global oil supply reached 98.8 million barrels per day in June and forecasts an average of 102.6 million barrels per day for 2026—‘on the assumption of a rapid de-escalation of new hostilities.’ It also noted that current global production stands approximately 9.4 million barrels per day below pre-war levels.
Stocks Rise for First Time Since War Began
Global oil inventories rose by 21 million barrels in June—the first increase since the conflict erupted at the end of February. This uptick is attributed to higher volumes of oil held in floating storage at sea.
Meanwhile, oil stocks held by member countries of the Organisation for Economic Co-operation and Development (OECD) fell by 62 million barrels in June. The IEA expects the pace of drawdown from these strategic reserves to further ease in the coming months.