World oil market ‘severely undersupplied’，to stay in deficit until Q4: IEA

The world is facing a massive 6 million b/d oil supply shortage that could keep markets tight well beyond 2026 even if the war in Iran is resolved swiftly, the International Energy Agency said May 13.

The Paris-based agency has overhauled its market outlook in light of the conflict, which it said has already created a cumulative supply loss of more than 1 billion barrels and could reduce global production by 3.9 million b/d across 2026.

On the demand side, the IEA now expects global oil demand to fall by 420,000 b/d to 104 million b/d over the full year, a decline more than five times the scale it projected last month. Before the conflict, it expected that annual demand would grow by 850,000 b/d.

From a starting point projecting a major oil supply glut in the first half of the year, the IEA now sees a 1.8 million b/d production shortfall through 2026, and expects the market to remain in deficit until the final quarter of the year.

"The market will remain severely undersupplied through the end of Q3 2026, even assuming the conflict ends by early June," the IEA said in its closely watched monthly oil outlook. Should the disruption last longer, however, the cumulative supply deficit could feasibly double in some scenarios, the IEA said.

Analysts at S&P Global Energy CERA see the crude market in a 1.2 million b/d deficit through 2026, but expect a deeper demand loss of nearly 2 million b/d. The OPEC secretariat, which has maintained a more bullish consumption view, said in its latest forecast May 13 that global oil demand would grow a "healthy" 1.2 million b/d in 2026 and another 1.5 million b/d in 2027, citing the resilience of the world economy.