Key facts
- The IEA has cut its 2026 oil demand forecast to 103.3 million barrels per day (b/d).
- Global oil demand in Q2 2026 is expected to be 5 million b/d lower year-on-year.
- Global oil supply is forecast to surge by 8 million b/d in 2027, reaching 110.3 million b/d.
- A significant global oil surplus is anticipated for 2027.
- Global oil stocks have decreased by 3.8 million b/d since the US-Iran war began.
- U.S. crude stocks fell 8.3 million barrels in the week ended June 12, according to an API report.
Oil prices steadied near a three-month low as investors weighed the impact of a potential U.S.-Iran peace deal against the International Energy Agency's (IEA) warning of a looming supply overhang in 2027. The IEA has cut its 2026 oil demand forecast to 103.3 million barrels per day (b/d), a decrease from its previous forecast and representing a 3.9 million b/d drop from 2025 levels. Demand in the second quarter of 2026 is expected to be 5 million b/d lower year-on-year.
Meanwhile, global oil supply is forecast to surge by 8 million b/d in 2027 to 110.3 million b/d, driven by the recovery of Middle East Gulf production and increased output targets from OPEC+. This projection points to a significant global oil surplus in 2027, which the IEA suggests could provide an opportunity to replenish depleted inventories or build new strategic reserves. Global observed oil stocks have fallen by 3.8 million b/d since the start of the US-Iran war.
In the near term, the IEA noted that a U.S.-Iran deal should allow for the replenishment of depleted inventories. Goldman Sachs reduced its Brent price forecast for the fourth quarter of 2026 to $80 a barrel from $90, citing the deal. China's crude oil throughput fell 9.1% in May, and U.S. crude stocks fell 8.3 million barrels in the week ended June 12, according to an API report.