IEA: Global oil production will fall below demand in this year due to the Iran War

The IEA's monthly report on the oil market on Wednesday said that the global?oil?supply will not be able to meet the total _demand this year, as the Iran?war?has a devastating effect on the Middle -East oil production.

The agency stated that "With Hormuz still being restricted, the cumulative losses in supply from Gulf producers have already exceeded 1 billion barrels, with more than 14 million barrels of oil shut-in now, causing an unprecedented supply shock."

The base-case forecast is for the resumption of the Strait of Hormuz traffic to be gradual from the third quarter, the report said.

The IEA 'forecasts' imply that'supply will be 1.78 million bpd less than total demand in 2026. This is in contrast to a surplus of 410,000 bpd projected in the report last month and a surplus of close to 4,000,000 bpd in its December report.

The agency said that the war will cause a drop in supply of around 3.9 millions barrels per day by?2026, down from its previous estimate of 1.5 million bpd.

The IEA has revised its forecast to show a 420,000 bpd decline in demand this year. This is compared with a previous prediction of 80,000 bpd. The war is also putting pressure on the consumer as price spikes are causing demand destruction and a slower growth in the economy.

(source: Reuters)