Global oil supply jumps 4.1 million bpd in June as Hormuz shipments recover, says IEA

Global oil supply recorded its strongest monthly increase in several months, rising by 4.1 million barrels per day (bpd) in June as the recovery of crude shipments through the Strait of Hormuz boosted Gulf production, the International Energy Agency (IEA) said on Friday.

Despite the sharp rebound, the agency noted that global oil output remained well below levels seen before the US-Israel-Iran conflict because of lingering security disruptions across the region.

In its latest Oil Market Report, the IEA said global oil production was still about 9.4 million bpd below pre-war levels, although improving conditions in the Gulf supported a stronger-than-expected recovery during June.

The agency also upgraded its oil supply and demand forecasts, citing improving market conditions following the US-Iran framework agreement. However, it cautioned that continued geopolitical tensions in the Gulf remain a key source of uncertainty for global energy markets.

According to the report, oil production from Gulf producers increased by about 3.5 million bpd in June as output partially recovered after the agreement between Washington and Tehran.

However, intermittent disruptions to shipping through the Strait of Hormuz continued because of security concerns and the ongoing reliance on US naval escorts. As a result, regional oil production remained approximately 11.4 million bpd below pre-war levels.

Production from the OPEC+ alliance, which includes the Organisation of the Petroleum Exporting Countries (OPEC) and its partners, rose by around 2.45 million bpd to 38.39 million bpd during the month.

Saudi Arabia contributed about 900,000 bpd to the increase, while Kuwait added approximately 630,000 bpd.

Oil output from non-OPEC+ producers also climbed by about 1.63 million bpd to 60.37 million bpd. The United Arab Emirates accounted for more than half of that increase, contributing roughly 940,000 bpd.

The IEA said global oil supply is now expected to average 102.6 million bpd this year, assuming transit through the Strait of Hormuz continues to improve.

Although the projection still represents a year-on-year decline of about 3.7 million bpd, it is 210,000 bpd higher than the agency's previous forecast.

The agency, however, warned that substantial risks remain as negotiations over the future administration of the Strait of Hormuz continue and regional hostilities have yet to end completely.

Looking ahead, the IEA projected global oil production to rebound by around 7.5 million bpd to 110.1 million bpd in 2027.

On the demand side, the agency revised its 2026 global oil demand forecast upwards by 70,000 bpd, reflecting stronger-than-expected oil deliveries during the second quarter.

Under the revised outlook, global oil demand is forecast to decline by around 1 million bpd year-on-year to 103.46 million bpd in 2026. If realised, it would mark the first annual decline in oil demand since 2020, when the COVID-19 pandemic severely disrupted global energy markets.

The report showed that 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 unlock pent-up demand across Asia. Lower oil prices and an improving global economic outlook also supported consumption, according to the IEA.

The agency maintained its forecast for global oil demand to increase by around 2 million bpd in 2027, lifting total consumption to 105.47 million bpd.

However, it projected average annual demand growth of about 480,000 bpd between 2025 and 2027, significantly below historical averages, signalling a more moderate pace of expansion in global oil consumption.