Global Oil Market: Demand, Supply Capacity and the 2026 Supply Shock

This report draws on two IEA products and one EIA product. The IEA's medium-term Oil 2025 report covers 2024-2030. Its monthly Oil Market Report (OMR) gives the near-term picture. The US Energy Information Administration's Short-Term Energy Outlook (STEO) covers prices and production to 2027.

The two horizons now point different ways. Oil 2025 described a comfortably supplied market: capacity was forecast to grow by 5.1 mb/d to 114.7 mb/d by 2030, well ahead of a 2.5 mb/d rise in demand [1]. In 2026, conflict in the Gulf disrupted flows. The IEA's September 2026 OMR projects world supply of 100.7 mb/d in 2026, down 5.7 mb/d from 2025 [2].

Before the disruption, the IEA forecast that global oil demand would rise by 2.5 mb/d from 2024 to 2030 and plateau around 105.5 mb/d by the end of the decade [1]. Annual growth was expected to slow from roughly 700 kb/d in 2025 and 2026 to a trickle, with a small decline in 2030 [1].

Demand growth is shifting by region:

• Emerging and developing economies were forecast to add 4.2 mb/d over 2024-2030 [1].
• OECD consumption was forecast to fall by 1.7 mb/d through 2030 [1].
• India's expected increase of 1 mb/d is the largest of any single country [1].
• China's oil consumption in 2030 is set to be only marginally higher than in 2024 [1].

From 2015 to 2024, Chinese demand rose by nearly 6 mb/d, accounting for 60% of the global increase in oil use [1]. Electric cars are set to displace 5.4 mb/d of global oil demand by 2030 [1]. Petrochemicals become the main source of demand growth from 2026, and polymers and synthetic fibres are forecast to need 18.4 mb/d of oil by 2030 [1].

In the near term, the September 2026 OMR forecasts that world oil demand will decline by 2.5 mb/d in 2026 and recover by 2.6 mb/d in 2027 [2]. A month earlier, the August OMR had expected a 2026 decline of 1.6 mb/d [4].

From 2015 to 2024, the United States accounted for 90% of the increase in global supply, as shale lifted US output by more than 8 mb/d to over 20 mb/d [1]. Oil 2025 expected global natural gas liquids (NGL) output to rise by 2.3 mb/d to 20.1 mb/d by 2030, nearly half of the total capacity increase [1]. Crude oil capacity was set to rise by 1.8 mb/d [1]. Upstream oil investment was set to fall by 6% to around USD 420 billion in 2025 [1].

The 2026 disruption changed this picture. Global oil production fell by 1.6 mb/d month-on-month to 100.1 mb/d in August 2026, as more than 10 mb/d of Gulf output stayed shut in [2]. The IEA expects production to rebound by 8 mb/d in 2027 [2]. The US, Canada, Brazil, Guyana and Argentina, which the IEA calls the 'Americas Quintet', are set to add 1.4 mb/d in 2026 [2].

The EIA's August 2026 STEO projects that global liquid fuels production will fall from 106.1 mb/d in 2025 to 100.8 mb/d in 2026, then rise to 109.7 mb/d in 2027 [3]. It projects OPEC production at 24.0 mb/d in 2026, down from 29.3 mb/d in 2025 [3].

The EIA reports Brent crude at an average of USD 81 per barrel in 2024 and USD 69 in 2025 [3]. It projects USD 87 in 2026 and USD 69 in 2027 [3]. The EIA expects prices to fall to an average of USD 78 per barrel by 4Q26 as traffic through the Strait of Hormuz recovers and shut-in production restarts [3].

Oil 2025 expects 4.2 mb/d of new refining capacity by 2030, partly offset by 1.6 mb/d of closures [1]. Most of the new capacity is in Asia, especially China and India. Net capacity growth is set to exceed refined product demand, so the IEA expects more closures, with high-cost plants in Europe and on the US West Coast hardest hit [1].

Medium-term figures come from the IEA's Oil 2025 executive summary (published 2025, forecast period 2024-2030). They were prepared before the 2026 Gulf supply disruption. Near-term figures come from the IEA Oil Market Reports for August and September 2026 and from the EIA STEO released on 11 August 2026. Values for 2026, 2027 and 2030 are forecasts.

mb/d means million barrels per day and kb/d means thousand barrels per day. IEA supply includes crude, NGLs, biofuels and other liquids. EIA figures are global liquid fuels production. The two agencies use different definitions, so their numbers should not be combined directly. This report includes no FREEE.REPORT calculations.