IEA Projects Wider Drop in Oil Supply This Year Amid Strait of Hormuz Closure

Global Oil Supply Expected to Drop by 4.3 Million Barrels Per Day This Year

Due to the prolonged closure of the Strait of Hormuz, this year’s global oil supply has dropped further than last month’s projections.

The International Energy Agency (IEA) stated in its Oil Market Report for August, published on the 12th (local time), that global oil supply for 2026 is expected to decrease by an average of 4.3 million barrels per day. This is 600,000 barrels higher than the previous month’s forecast, which estimated a decline of 3.7 million barrels per day.

The IEA explained, “The ongoing closure of the Strait of Hormuz and high fuel prices continue to put pressure on oil consumption.”

Ships in the Strait of Hormuz. Photo by Yonhap News Agency

As a result, global oil demand this year is projected to decline by an average of 1.6 million barrels per day. This figure is 510,000 barrels more than the estimate in the July report. However, the IEA noted that the size of the decline is gradually easing and anticipates a return to growth in the fourth quarter of 2026. For next year, global oil demand is forecast to rise by 2.4 million barrels per day.

Currently, international oil prices are far above pre-war levels, comparing to late February when the U.S. and Israel launched attacks on Iran, marking the beginning of the conflict. During the war, oil infrastructure in several Gulf region countries was also damaged.

In response to the U.S. and Israeli attacks, Iran has effectively blocked the passage of oil tankers and cargo ships through the Strait of Hormuz—which previously handled about one-fifth of the world’s oil supply.

The IEA urged a swift normalization of navigation through the Strait of Hormuz, a major shipping route, warning that although the oil market is expected to move back into oversupply towards the end of this year, inventories are being rapidly depleted.

This content was produced with the assistance of AI translation services.