Iran war wipes out 1B barrels of oil supplies: IEA

The International Energy Agency (IEA) headquarter

Global oil supplies will not meet total demand this year, amid severe disruptions caused by the Iran war to oil production in the Middle East, creating a wide imbalance in global markets, the International Energy Agency (IEA) said in its monthly report issued today, May 13.

The agency explained that continued restrictions on tanker movements through the Strait of Hormuz have resulted in cumulative supply losses from Gulf producers exceeding 1 billion barrels so far.

The May report pointed to disruptions affecting more than 14 million barrels per day (bpd) of production, describing the situation as an “unprecedented supply shock” for the energy sector.

Based on these developments, the IEA expects supply to fall short of total demand by around 1.78 million bpd in 2026. This marks a sharp reversal from last month’s forecast, which projected a surplus of 410,000 bpd, and from the December report, which estimated a surplus of nearly 4 million bpd.

The agency also lowered its supply forecasts, projecting a decline of 3.9 million bpd in 2026 due to the war, compared to its previous estimate of a 1.5 million-bpd decline.

Meanwhile, global demand is expected to decrease by 420,000 bpd this year, versus an earlier forecast of an 80,000-bpd decline.

The agency’s base-case scenario assumes a gradual resumption of traffic through the Strait of Hormuz starting from the third quarter of this year and beyond. Nevertheless, current data reflects the significant impact ongoing military operations in the region have had on global supply chains.