The World Bank says global oil supply will decline by 7 million barrels per day (bpd) in the second quarter (Q2) of 2026, as disruptions linked to tensions in the Middle East weigh on production and exports.
Supply could also drop by 1.5 million bpd in 2026, the
multilateral said in its April 2026 Commodity Markets Outlook.
The Washington-based organisation said the expected 1.4
percent drop reflects “production and export restrictions in the Middle East”,
particularly among countries shipping crude through the Strait of Hormuz.
“In 2026 Q2 alone, supply is projected to drop by almost 7
mb/d (6.6 percent; y/y), to 98.4 mb/d, the biggest quarterly fall since the
COVID-19 pandemic,” the report said.
“If the baseline assumptions hold and supply disruptions in
the Middle East ease around the middle of the year, global production is
expected to recover to an average of 108.3 mb/d in 2026H2.”
On an annual basis, the bank said supply cuts would be
concentrated in countries exporting via the Strait of Hormuz, while output
gains are expected to come mainly from the United States, with an increase of
about 0.5 million bpd.
The report said output by the OPEC+ group is forecast to
decline by “almost 5 percent” in 2026, with later increases “unable to fully
compensate for recent forced shut-ins”.
It noted that the oil market would record a significant
shortfall in Q2.
“The oil market is expected to be in deficit by about 3.7
mb/d in 2026Q2, the highest quarterly deficit ever recorded by the
International Energy Agency,” it said.
For the full year, however, the bank projects a narrow
surplus of 0.4 million bpd, as supply rebounds and demand softens in the second
half.
On demand, the bank said global oil consumption is expected
to “fall by 0.1 mb/d (0.1 percent) in 2026”, reflecting weaker usage in
advanced economies and parts of the Middle East and North Africa.
It said consumption would be “hit hardest in MNA, where
demand from heavy industry is being compromised”, as well as in some advanced
economies.
‘OIL DEMAND TO INCREASE IN NIGERIA’
The World Bank said demand will increase in some emerging
markets.
“Demand is expected to collectively increase in Brazil,
China, India, Indonesia, and Nigeria by 0.4 mb/d, about two-thirds of the
previous year’s increase,” the bank said.
The report also listed Iran, Kuwait, Lebanon, Qatar, Turkey,
and Vietnam among the most affected countries, with declines ranging “from
about 5 percent in Vietnam to almost 30 percent in Lebanon”.
On prices, the Bretton Woods institution said risks remain
skewed to the upside, largely due to uncertainty around the conflict in the
Middle East.
“The risks of re-escalating hostilities in the Middle East
or lasting impediments to regional oil flows represent the most significant
threat to the oil price forecast,” it said.
The bank added that a prolonged disruption to shipments
through the Strait of Hormuz could tighten supply further, although emergency
reserves and alternative sources may cushion the shock.
On April 28, the United Arab Emirates (UAE), one of the
biggest oil-producing countries, said it was quitting the Organization of the
Petroleum Exporting Countries (OPEC) after nearly 60 years of membership.
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