IEA Reports Largest Monthly Increase in Global Oil Supply

The International Energy Agency (IEA) reported that global oil supply recorded its largest monthly increase in recent months in June, driven by recovering shipments through the Strait of Hormuz which boosted production from Gulf states. However, oil production remains well below levels seen before the outbreak of conflict due to persistent security disruptions, the IEA stated. In its monthly Oil Market Report released on Friday, the IEA also revised upwards its projections for global oil supply and demand as market conditions improved following a framework agreement between the United States and Iran. Nevertheless, the agency cautioned that geopolitical risks in the Gulf region continue to overshadow the outlook for global energy markets. The IEA noted that global oil production is still approximately 9.4 million barrels per day (bpd) lower than pre-war levels between the United States, Israel, and Iran, despite a significant recovery throughout June. Oil supply from Gulf countries increased by around 3.5 million bpd in June as production began to recover following the framework agreement between the United States and Iran. However, disruptions to shipments through the Strait of Hormuz still occur periodically due to security concerns and the continued reliance of shipping on United States Navy escorts. This situation leaves oil production in the Gulf region still around 11.4 million bpd below pre-conflict levels. Production from the OPEC+ group, comprising the Organization of the Petroleum Exporting Countries (OPEC) and its partner nations, increased by approximately 2.45 million bpd to 38.39 million bpd in June. Saudi Arabia contributed around 900,000 bpd of that increase, while Kuwait added approximately 630,000 bpd. Meanwhile, production from non-OPEC+ countries rose by about 1.63 million bpd to 60.37 million bpd. The United Arab Emirates was the largest contributor, adding approximately 940,000 bpd, or more than half of the group’s production increase. The IEA estimates that global oil supply will average 102.6 million bpd this year if shipment volumes through the Strait of Hormuz continue to recover. This projection, while still showing a decline of around 3.7 million bpd compared to the previous year, has been revised upwards by 210,000 bpd from last month’s forecast. However, the IEA warned that significant risks remain as negotiations regarding the management of the Strait of Hormuz are ongoing, while attacks in the region have not completely ceased. The agency projects global oil production will recover by about 7.5 million bpd to reach 110.1 million bpd in 2027. On the demand side, the IEA revised upwards its projection for global oil consumption in 2026 by 70,000 bpd compared to its previous estimate, driven by stronger-than-expected oil deliveries during the second quarter. Based on the latest forecast, global oil demand is expected to fall by around 1 million bpd year-on-year to 103.46 million bpd in 2026. This decline would mark the first annual contraction since 2020, when the COVID-19 pandemic rocked global energy markets. According to the report, global oil demand in May fell by approximately 5.3 million bpd compared to the same period last year to 97.9 million bpd, the lowest level this year. Demand began to recover after the agreement between the United States and Iran in mid-June, which helped restore oil exports through the Strait of Hormuz while also reviving pent-up demand in the Asian region. The IEA added that lower oil prices and an improving global economic outlook also supported increased energy consumption. For 2027, the IEA maintained its projection for global oil demand growth of around 2 million bpd, bringing total consumption to an estimated 105.47 million bpd. Nonetheless, the agency estimates that average global oil demand growth over the 2025–2027 period will be only around 480,000 bpd annually, far lower than historical growth trends.