IEA Cuts 2026 Oil Supply Forecast as Diesel Squeeze Deepens

The International Energy Agency cut its 2026 global oil-supply forecast in a report published September 11, warning that continued disruption in the Middle East has tightened fuel markets, drained inventories and pushed diesel prices higher.

The agency now projects global oil supply will average 100.7 million barrels per day in 2026. That is 1.3 million barrels per day below its previous forecast and 5.7 million barrels per day below 2025 levels. The figure is an agency projection, not a final production result, and could change as shipping, security and production conditions develop.

What changed in the September 11 forecast

Global oil production fell by 1.6 million barrels per day month over month to 100.1 million barrels per day in August. More than 10 million barrels per day of Gulf output remained shut in as security risks disrupted production and exports.

The IEA said the expected recovery in Middle East supply has been deferred until 2027. It also cut its 2026 demand outlook, forecasting a decline of 2.5 million barrels per day. The agency attributed the downgrade to disrupted flows, higher prices and weaker use of middle distillates and petrochemical feedstocks, with losses especially concentrated in Asia.

That combination matters because the market is losing available supply while higher prices and shortages are also reducing consumption. The demand forecast does not mean the disruption is over. It reflects the economic pressure created by it.

Shipping and refining are keeping diesel tight

The IEA said crude losses from Gulf producers narrowed to just below 45% through bypass routes and escorted shipping. That does not mean the Strait of Hormuz is operating normally. Traffic remains severely constrained, and the agency’s shipping monitor warns that AIS spoofing, GPS jamming and vessels going dark limit the precision of maritime-flow data.

Refined products and liquefied petroleum gas face a sharper squeeze. Exports were nearly 60%, or 3.7 million barrels per day, below February levels. Gulf diesel and gasoil exports averaged only 390,000 barrels per day in August, just over one-quarter of their prewar level. Disruptions to Russia’s refining system and product exports added to the losses.

That is why diesel has become the immediate pressure point rather than crude alone. The IEA said U.S. diesel and gasoil prices exceeded $200 per barrel in early September, while Reuters reported that the U.S. national-average retail diesel price passed $6 per gallon for the first time on September 10. Those are different measures: the IEA figure refers to a refined-product market benchmark, while the Reuters figure refers to fuel sold at retail to drivers and businesses.

Inventories are providing less protection

Global observed oil inventories fell another 95 million barrels in August. Since February, the cumulative draw has reached 507 million barrels, leaving less stock available to absorb another attack, shipping delay or refinery outage.

North Sea Dated crude, a benchmark for physical oil, reached $113.48 per barrel on September 9. That benchmark is not the same as the price at a gasoline or diesel pump, but sustained crude and refined-product costs can move through freight, aviation, manufacturing and food distribution.

Associated Press reporting said higher diesel, jet-fuel and bunker-fuel costs are affecting transportation expenses. Diesel is especially important for long-haul trucks, farm equipment and delivery networks. The effects will not reach every household or business at the same time or by the same amount, but higher fuel costs can appear in shipping fees, grocery distribution, construction and manufactured goods before they are visible equally in gasoline prices.

Why the next few weeks matter

Associated Press reported Monday, September 14, that a Saudi oil pipeline damaged in an attack could remain mostly out of service for weeks, according to two regional officials briefed on the matter. The officials told AP that repairs could take three to five weeks and that the pipeline might operate partially during that period, but they could not say how much oil would move. The officials spoke anonymously and Saudi authorities had not independently confirmed the duration cited.

The IEA’s outlook therefore depends on more than the daily movement in Brent crude. A sustained improvement would require safer maritime traffic, functioning bypass routes, restored Gulf production and fewer refinery disruptions. If attacks continue or repairs take longer, shrinking inventories could leave the market with a smaller cushion.

The main change in the September 11 report is that the IEA no longer expects Middle East supply to recover fully during 2026. For consumers and businesses, the practical risk is not simply a high crude price. It is a continuing supply-and-logistics problem, with diesel and other refined products under particular pressure and the duration still uncertain.

Sources

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