Vienna: Global oil supply experienced its largest monthly increase in recent months in June, as shipments through the Strait of Hormuz recovered, boosting Gulf production. However, output remained significantly below pre-war levels due to ongoing security disruptions, according to the International Energy Agency (IEA) on Friday.
According to Anadolu Agency, the IEA raised its oil supply and demand outlooks, crediting improving market conditions following the US-Iran framework agreement. However, the agency cautioned that geopolitical risks in the Gulf continue to cloud the market outlook. Despite the sharp recovery in June, global oil production was still around 9.4 million barrels per day (bpd) below levels recorded before the US-Israel-Iran war.
The IEA's latest Oil Market Report highlighted that oil supply from Gulf producers rose by approximately 3.5 million bpd in June. This partial recovery followed the US-Iran framework agreement. However, intermittent disruptions to shipping through the Strait of Hormuz persisted due to 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, which includes the Organization of the Petroleum Exporting Countries (OPEC) and its allies, increased by about 2.45 million bpd in June, reaching 38.39 million bpd. Saudi Arabia contributed roughly 900,000 bpd of the increase, while Kuwait added around 630,000 bpd. Output from non-OPEC+ producers rose by approximately 1.63 million bpd to 60.37 million bpd, with the United Arab Emirates accounting for more than half of the increase at about 940,000 bpd.
The IEA revised its global oil supply forecast higher despite ongoing risks. The agency projected global oil supply to average 102.6 million bpd this year, assuming transit volumes through the Strait of Hormuz continue to recover. This forecast, while still indicating 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 of significant risks 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. Furthermore, the IEA raised 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. The revised outlook projects global oil demand to decrease 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 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.