The International Energy Agency (IEA) said global oil supply rebounded by 4.1 million barrels per day (bpd) in June to 98.8 million bpd as flows through the Strait of Hormuz recovered. However, global oil production remained about 9.4 million bpd below pre-war levels. Global observed oil inventories also increased in June, marking the first rise in four months.
The IEA said OPEC+ increased production by 2.5 million bpd in June and projects the group will raise output by 5.3 million bpd by 2027. It also expects non-OPEC oil production to grow by 2.2 million bpd in 2027, while total global oil supply is forecast to increase by 7.5 million bpd in 2027 if transit through the Strait of Hormuz continues to improve.
The IEA said the UAE’s June crude production averaged a record 4.10 million bpd, surpassing the previous 4.00 million bpd peak reached during the 2020 Saudi Arabia price war. The agency said Abu Dhabi responded more aggressively than other Persian Gulf producers to offset supply disruptions linked to the Iran conflict by deploying its national tanker fleet and chartering additional vessels from South Korea’s Sinokor, whose fleet is now the world’s largest VLCC operator. Many tankers reportedly sailed with AIS transponders switched off to move crude out of the Gulf. The report also noted the UAE announced its exit from OPEC at the end of April to remove production limits and expand output, with most of the production increase occurring before this week’s attacks on merchant vessels in the Strait of Hormuz.
On the demand side, the agency said global oil demand fell by 4.8 million bpd in the second quarter (Q2). It forecasts demand will rise by 1.2 million bpd in Q4, while global oil demand is expected to decline by 1.0 million bpd in 2026, slightly improved from its previous estimate of a 1.1 million bpd decline.
The IEA now expects the 2026 global oil supply shortfall to be 860,000 bpd, narrower than its previous forecast of 920,000 bpd. It also said refining operations and fuel supplies recovered more slowly than crude markets after the Strait of Hormuz reopened, tightening fuel markets during the summer demand season.
The agency warned that the recent escalation between the United States and Iran has clouded the outlook and could derail its forecast for a global oil supply surplus in 2027. Although the Strait of Hormuz reopened in June following a US-Iran agreement, renewed tensions on July 7-8 could disrupt oil transit and affect the expected supply increase.
The IEA also lowered its outlook for Russian oil production because of continued Ukrainian strikes on refineries, storage facilities and transport infrastructure. It cut Russia’s supply forecast by 85,000 bpd for this year and 150,000 bpd for next year, and now expects output to average 8.9 million bpd in 2026 and 8.8 million bpd in 2027. Separately, IEA Executive Director Fatih Birol urged the European Union to reconsider its 2021 ban on new Arctic oil and gas drilling, saying Europe needs Norway’s energy resources for long-term energy security.
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