The International Energy Agency (IEA) reported on Friday that global oil supply experienced its largest monthly increase in months during June, driven by the recovery of shipments through the Strait of Hormuz, which boosted Gulf production. However, output remained significantly below pre-war levels due to ongoing security disruptions.
Key Production Figures
According to the IEA's latest Oil Market Report, global oil production was still around 9.4 million barrels per day (bpd) below levels recorded before the US-Israel-Iran war, despite the sharp recovery in June. Oil supply from Gulf producers rose by approximately 3.5 million bpd during the month after output partially recovered following the framework agreement between the US and Iran.
Nevertheless, intermittent disruptions to shipping through the Strait of Hormuz persisted because of security concerns and continued reliance on US naval escorts, leaving regional oil production about 11.4 million bpd below pre-war levels. Production from the OPEC+ group increased by around 2.45 million bpd in June to 38.39 million bpd. Saudi Arabia accounted for roughly 900,000 bpd of the increase, while Kuwait contributed around 630,000 bpd.
Non-OPEC+ Output Rises
Output from non-OPEC+ producers rose by around 1.63 million bpd to 60.37 million bpd, with the United Arab Emirates accounting for more than half of the increase at approximately 940,000 bpd. The IEA also raised its oil supply and demand outlooks, citing improving market conditions following the US-Iran framework agreement, while warning that geopolitical risks in the Gulf continue to cloud the market outlook.
Supply Forecast Revised Upward Despite Lingering Risks
The IEA said global oil supply is expected to average 102.6 million bpd this year if transit volumes through the Strait of Hormuz continue to recover. The forecast, while still implying a year-on-year decline of around 3.7 million bpd, was revised upward by 210,000 bpd from last month's estimate. However, the agency warned that significant risks remain as negotiations over the future administration of the Strait of Hormuz continue and regional attacks have not fully ceased. Global oil production is projected to rebound by around 7.5 million bpd to 110.1 million bpd in 2027.
IEA Raises 2026 Demand Outlook
The IEA revised its 2026 global oil demand forecast upward by 70,000 bpd from its previous estimate, citing stronger-than-expected oil deliveries during the second quarter. Under the revised outlook, global oil demand is expected to decline by around 1 million bpd year-on-year to 103.46 million bpd in 2026, marking the first annual decline since 2020, when the COVID-19 pandemic severely disrupted global energy markets.
According to the report, global oil demand fell by 5.3 million bpd year-on-year to 97.9 million bpd in May, the lowest level recorded so far this year. Demand has since begun to recover following the mid-June agreement between the US and Iran, which helped restore oil exports through the Strait of Hormuz and released pent-up demand across Asia. Lower oil prices and an improving global economic outlook also supported consumption, the report said.
The IEA maintained its forecast for global oil demand to increase by around 2 million bpd in 2027, bringing total consumption to 105.47 million bpd. However, it projected average demand growth between 2025 and 2027 at around 480,000 bpd annually, well below historical trends.
