The International Energy Agency stated in its monthly oil market report released on Wednesday that global oil supply will be unable to meet total demand this year, due to severe disruptions to Middle Eastern oil production caused by the US-Israel conflict with Iran.

The agency noted: "With tanker traffic through the Strait of Hormuz still restricted, cumulative supply losses from Gulf oil producers have exceeded 1 billion barrels. Currently, more than 14 million barrels per day of oil production is disrupted, representing an unprecedented supply shock."

The report indicated that its base-case scenario forecasts a gradual resumption of shipments through the Strait of Hormuz starting in the third quarter.

The IEA's projections imply that in 2026, supply will fall short of total demand by 1.78 million barrels per day. This contrasts with last month's report, which predicted a surplus of 410,000 barrels per day, and the December report, which forecast a surplus of nearly 4 million barrels per day.

The agency stated that, affected by the conflict, full-year 2026 supply will be reduced by approximately 3.9 million barrels per day, a significant downward revision from the previously projected decline of 1.5 million barrels per day.

Simultaneously, the IEA now expects demand to decrease by 420,000 barrels per day this year, compared to a prior forecast of an 80,000 barrel per day decline. The agency added that consumption is also under pressure from the conflict, as surging oil prices lead to demand destruction and slower economic growth.