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WASHINGTON — The International Energy Agency is forecasting the global oil market will face a supply deficit of 1.8 million barrels per day during the third quarter as disruptions to Middle East production and shipping continue to constrain supplies.
In its August Oil Market Report, the IEA revised its global supply outlook downward, forecasting production will decline by 4.3 million barrels per day in 2026.
The agency had forecast a decline of 3.7 million barrels per day in July.
Global oil supply is now expected to average 102.02 million barrels per day this year, leaving production about 1.27 million barrels per day below demand.
The IEA says the deficit is expected to be most pronounced between July and September, when supply is forecast to fall 1.8 million barrels per day short of demand. The agency says it would be the largest quarterly deficit since the final three months of 2021.
The revised outlook comes as Middle East oil flows remain disrupted by the continued closure of the Strait of Hormuz, the U.S. blockade of Iranian exports and attacks around the Bab el-Mandeb Strait.
The IEA says Middle East oil loadings briefly returned to pre-war levels of about 20 million barrels per day in early July before falling to 12 million barrels per day later in the month.
Middle East production remained about 8.3 million barrels per day below pre-war levels in July.
The agency also points to reduced Kazakh exports and disruptions to Russian refining following Ukrainian drone attacks as additional pressures on global supplies.
As the international market faces a significant supply shortfall, Canada’s largest oil producer says several potential oil sands expansions will remain on hold until agreements with the federal and Alberta governments are finalized.
Canadian Natural Resources CEO Scott Stauth told an earnings conference call last week the company will not proceed with its mid- and long-term oil sands expansion projects until provisions in a memorandum of understanding involving Ottawa, Alberta and major oil sands producers are finalized in binding agreements.
Projects remaining on hold include Canadian Natural’s proposed $650-million Jackfish expansion, which could add about 30,000 barrels per day, and the approximately $2.5-billion Pike 2 project, which could add another 70,000 barrels per day.
The company’s longer-term proposed Jackpine mine expansion, with potential production of about 150,000 barrels per day, is also on hold.
Early engineering work on the three projects had been planned for this year.
The memorandum signed in July includes provisions related to the proposed Pathways carbon capture and storage project, carbon pricing, government financial support and regulatory permitting. Several of those measures have yet to be translated into final legislation or agreements.
Canadian Natural is nevertheless producing more oil from its existing operations.
The Calgary-based company increased its 2026 production forecast to between 1.637 million and 1.682 million barrels of oil equivalent per day after quarterly production reached 1.68 million barrels of oil equivalent per day.
The IEA expects the current global shortage could reverse next year, forecasting supply could exceed demand by 4.61 million barrels per day in 2027. That projection assumes hostilities in the Middle East ease and disrupted oil supplies recover.
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