Overview
- The International Energy Agency reported that demand destruction from the Iran conflict has shifted the market away from a pure supply shock toward a demand-driven glut.
- The IEA trimmed its 2026 demand-growth forecast by about 80,000 barrels per day and now projects a global supply surplus of roughly 410,000 barrels per day for the year.
- Consumption declines have been concentrated in naphtha, LPG and jet fuel, even as global oil stocks have fallen sharply since the conflict began, according to the IEA.
- Markets reacted by cutting WTI price targets and lowering the odds of a new crude high this year, with prediction markets showing around a 6.5% chance of a record by September 30.
- The outlook could reverse if the Iran conflict eases or if OPEC and major producers coordinate cuts, and the IEA warns that a resumption of Gulf exports could create a larger supply overhang next year.