Supply shock keeps oil markets under pressure
The International Energy Agency says oil markets are again facing upward price pressure as Middle East export disruptions persist. Its 18 September 2026 commentary describes a market that has avoided the full impact of the Strait of Hormuz shortfall only through bypass routes, higher output outside the Gulf, weaker demand and emergency stock releases. The remaining gap is still large enough to drain inventories quickly, raising the stakes around any further disruption.Price pressure has returned after a temporary easing
Benchmark oil prices have resumed an upward trend in recent weeks, according to the IEA, after renewed hostilities in the Middle East brought more disruption to regional exports. Prices had eased from their April peaks when emergency stocks were released, exports shifted to routes that bypass the Strait of Hormuz, producers outside the region increased supply and demand softened.The agency's warning is conditional but direct: if Gulf supplies stay constrained and commercial inventories keep falling quickly, higher prices and further demand reductions may be needed to close the supply-demand gap. That makes the issue more than a regional shipping problem. Refiners, fuel consumers and governments are now exposed to a market balance that depends on shrinking buffers rather than a full recovery of normal trade flows.
Hormuz flows remain far below pre-war levels
Six months after the start of the Middle East conflict, the IEA says Gulf oil production and exports remain heavily restricted. Flows through the Strait of Hormuz averaged only 7.6 million barrels per day in August, 13.1 million barrels per day below pre-war levels, with cumulative export losses through the waterway approaching 2.8 billion barrels.The headline disruption has not translated into an equal inventory loss because other parts of the system absorbed part of the shock. IEA balances show a smaller deficit of 2.2 million barrels per day in the second quarter of 2026 and 1.7 million barrels per day in the third quarter. The implication is that the market is still short, but the shortfall has been masked by route shifts, prior surpluses, additional production and demand destruction.
Bypass routes helped, then became vulnerable
The oil market entered the crisis with a cushion. The IEA says global oil supply exceeded demand by 1.4 million barrels per day on average in 2025 as OPEC+ producers gradually unwound production cuts, with the surplus above 2 million barrels per day in the second half of that year and significant stock builds, especially in China.As shipping through Hormuz was stifled, Saudi Arabia and the United Arab Emirates redirected available barrels to ports outside the strait. Exports from Saudi Arabia's Red Sea port of Yanbu and the UAE's Fujairah port rose from 4.1 million barrels per day in February to 7.8 million barrels per day in June, before Houthi attacks in the Red Sea cut those flows back to 5.5 million barrels per day in August. The IEA says these bypass routes offset more than 500 million barrels, or 2.8 million barrels per day, of Hormuz losses since the conflict began.
That workaround has also weakened. Attacks on the Saudi East-West pipeline led to its shutdown in early September, further curtailing bypass flows. At the same time, exports through Hormuz have shown signs of increasing as US military support facilitated transits, but the IEA says flows remain below pre-war levels. The market is therefore leaning on routes that are useful but not secure enough to restore normal conditions.
Non-Gulf supply and weaker demand are carrying part of the load
Producers outside the Gulf have raised output, adding a cumulative 420 million barrels, or 2.3 million barrels per day, of oil supply since the start of the war, according to the IEA. Between February and August, the agency cites substantial gains from the United States, Brazil, Kazakhstan, Venezuela and Nigeria, while global biofuels supply rose seasonally by 890,000 barrels per day.Demand has moved in the opposite direction. The IEA estimates that global oil demand over the past six months averaged 5.8 million barrels per day less than in February, equivalent to a cumulative reduction of more than 1 billion barrels. China accounted for the largest decrease, with apparent demand 1.7 million barrels per day below February levels and 1.1 million barrels per day below the same six-month period a year earlier.
Chinese seaborne crude imports fell from 11.5 million barrels per day in February to a low of 6 million barrels per day in June, easing pressure on other Asian crude importers. The IEA also points to weaker demand in the Middle East, restrictions on petrochemicals and aviation, fuel rationing and emergency conservation policies in parts of Asia, and consumption cuts caused by product shortages and higher prices. For 2026 as a whole, the agency now expects global oil demand to contract by 2.5 million barrels per day, with the Middle East and Asia accounting for 80% of the decline.
Inventories are absorbing the remaining deficit
Even with extra supply and lower consumption, the IEA says global oil inventories have been drawing at record rates of 2.8 million barrels per day over the past six months. Observed oil stocks are now 507 million barrels lower than at the onset of the war.IEA member countries have released more than 300 million barrels of emergency stocks under the collective action announced on 11 March. Non-OECD crude inventories accounted for 105 million barrels of the overall decrease, with 65% of that decline coming from above-ground tanks in China and much of the rest from lower oil-on-water volumes.
This is the key risk in the IEA's analysis. Stocks can smooth a shock for a time, but falling inventories reduce the market's ability to handle another disruption. If production and export routes do not recover more fully, the adjustment burden shifts toward prices and consumption.
Conclusion
The IEA's commentary describes an oil market that has avoided a deeper immediate rupture through four buffers: bypass exports, non-Gulf production growth, demand reductions and emergency stock releases. None of those buffers fully replaces the lost Gulf flows, and several are already under pressure.The agency's practical conclusion is that fully reopening the Strait of Hormuz and bypass routes has become more urgent as inventories deplete. For energy markets, the central signal is not simply that oil is tighter. It is that the current balance depends on temporary adjustments that become less reliable the longer the disruption lasts.
Sources
Editorial Team - CoinBotLab
