The International Energy Agency (IEA) significantly lowered its 2026 global oil supply and demand forecasts on Friday. The agency cites the prolonged Middle East conflict as the primary driver for the revision. The report projects a 2.5 million barrel per day (bpd) drop in world oil demand this year. The IEA expects normal oil flows from the Gulf to resume only in 2027.
Saudi Arabian output fell to its lowest level in over 30 years during August. Supply tightness pushed U.S. diesel prices to a record average above $6 per gallon. OPEC also reduced its 2026 demand growth forecast, though it expects a smaller contraction than the IEA.