Mumbai, Aug. 17 -- The International Energy Agency said global oil supply will fall by four point three million barrels per day (mn bpd) this year as renewed hostilities in the Middle East disrupted flows and pushed markets into a deeper deficit. The agency noted that tanker attacks in the Strait of Hormuz resumed, that a US blockade curtailed Iranian exports and that assaults in the Bab el-Mandeb and drone strikes in the Black Sea further reduced available shipments. It also cited constrained CPC Blend exports from Kazakhstan.

The agency said this is a deterioration from the 3.7 mn bpd contraction forecast in July and reduces total supply to 102.02 mn bpd, its lowest projection for the year. That would leave global supply about one point two seven mn bpd below demand, widening from an 860,000 bpd shortfall implied in July. Middle East loadings recovered to 20 mn bpd at the start of July but fell back to 12 mn bpd later, and the region's production remained eight point three mn bpd below pre-war levels.

The IEA expects an oil market deficit of one point eight mn bpd over July to September, a downward revision of one mn bpd from the prior forecast, which would be the deepest quarterly shortfall since late 2021. For 2027 the agency anticipates global supply could exceed demand by four point six one mn bpd if tensions de-escalate, which might permit inventories to recover to February 2026 levels by mid next year after cumulative stock draws of 410 mn barrels.

The IEA revised its demand view to a contraction this year of one point six mn bpd, deeper than the roughly one mn bpd drop signalled last month, while OPEC still expects growth of 580,000 bpd, though 200,000 bpd lower than before. Russian refining remained close to a 20 year low at three point nine mn bpd in July and Russian oil output edged down by 100,000 bpd to eight point seven six mn bpd. Global refinery crude processing was down by five mn bpd in July, supporting record refining margins.

Published by HT Digital Content Services with permission from Construction World.