The IEA’s May Oil Market Report describes the current energy crisis as an unprecedented supply shock. Conflict and the Strait of Hormuz closure caused a supply loss of nearly 13 million barrels per day. This supply disruption has persisted since February, causing global oil inventories to deplete at a record pace.
The IEA projects global oil demand will contract by 420,000 barrels per day. This contraction is forecast for 2026 and marks a sharp reversal from pre-war growth estimates. OPEC also lowered its 2026 demand growth forecast today, citing geopolitical uncertainty.
The energy market faces a severe supply deficit that is now causing significant demand destruction. The IEA expects the market to remain in deficit until the final quarter of 2026. This imbalance signals continued price volatility for the sector.