IEA cuts 2026 oil supply forecast, expects Gulf recovery in 2027

The International Energy Agency has reduced its 2026 oil supply forecast to an average of 100.7 million barrels a day, down from 102 million. The agency now anticipates a full recovery of Gulf oil supply by 2027. Global oil consumption is projected to decline by 2.5 million barrels a day in 2026 compared to 2025, with a contraction of 940,000 barrels a day deeper than previously expected. Despite weaker demand, observed global inventories fell by 95 million barrels in August, indicating ongoing physical tightness. Increased oil flows bypassing the Strait of Hormuz have helped narrow crude export losses, but Gulf refined-product and liquefied petroleum gas exports in August were still nearly 60% below February levels. For Bitcoin investors borrowing dollars, inflation and interest rate expectations are critical. The University of Michigan's preliminary September survey shows year-ahead inflation expectations rising to 4.6% from 4.0% in August, while long-run expectations increased to 3.4% from 3.3%. Fed Governor Christopher Waller noted that energy costs have not yet spread into broader prices, but he identified renewed energy pressure and rising long-term expectations as risks. The upcoming Fed meeting will assess whether weaker consumption and recovering flows can alleviate inflation pressure.