The International Energy Agency (IEA) has issued a warning regarding the global oil refining system, stating it is 'stretched to the limit' due to the ongoing wars in Iran and Ukraine.
In its latest monthly oil report, the IEA has cut its global oil supply and demand projections for the remainder of the year, predicting a decline in world oil supply by 5.7 million barrels per day (bpd) in 2026, which is 6% lower than the previous year. This is a significant adjustment from the IEA's earlier forecast of a 4% drop.
The agency also expects global oil demand to fall by 2.5 million bpd this year, a larger decrease than the previously anticipated 1.6 million bpd decline.
The IEA highlighted that shrinking inventories and a strained global refining system necessitate urgent progress in resolving Middle Eastern conflicts and the ongoing Russia-Ukraine war to prevent further market tightening and demand destruction.
This report arrives amid rising oil prices, with Brent crude futures trading at $104.44 per barrel and West Texas Intermediate futures at $99.86, both potentially ending the week above $100 per barrel for the first time since mid-May