The International Energy Agency has sharply lowered its outlook for global oil supply, forecasting a decline of 5.7 million barrels per day in 2026 as continuing disruptions in the Middle East restrict production and the movement of crude through key export routes.
The revised forecast, contained in the IEA’s latest Oil Market Report released on Friday, represents a deeper decline than previously expected and reflects the prolonged disruption to oil production and shipping in the region.
The agency said global oil production fell by 1.6 million barrels per day in August to about 100.1 million barrels per day. More than 10 million barrels per day of Gulf production remained offline during the month as attacks and security risks affected energy infrastructure and shipping.
Saudi Arabia has been particularly affected. According to the IEA, the country’s crude supply fell to about 6 million barrels per day in August, a decline of 2.3 million barrels per day from July and its lowest level in more than three decades.
The disruption has also affected the availability of refined petroleum products. The IEA said global inventories fell sharply in August, while diesel and other refined fuels have recorded substantial price increases as refiners and consumers compete for limited supplies.
The supply problems are occurring even as oil demand weakens. The IEA now expects global oil demand to fall by about 2.5 million barrels per day in 2026, compared with its earlier forecast of a 1.6 million-barrel-per-day decline. Higher fuel prices and disruptions to economic activity are contributing to the weaker demand outlook.
For Nigeria, the situation presents both an opportunity and a risk. Higher crude prices can increase government revenue and export earnings for Africa’s largest oil producer, but sustained disruptions could also raise the cost of fuel, transportation, logistics and imported goods.
Businesses that rely heavily on diesel and other petroleum products could face additional pressure if elevated energy costs persist. Manufacturers, logistics operators and other companies with significant transportation or power expenses are particularly exposed to a prolonged increase in energy prices.
The IEA expects oil-market conditions to remain difficult until production and shipping through the Middle East return to more normal levels. For Nigeria, businesses and investors will be watching whether the current supply shock proves temporary or develops into a prolonged period of higher energy costs and market volatility.
