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Countries are rapidly depleting oil inventories and strategic reserves due to "unprecedented" supply disruptions caused by the Middle East war, the International Energy Agency (IEA) reported on Wednesday.
"Rapidly shrinking buffers amid continued disruptions may herald future price spikes ahead," the agency warned in its latest monthly report, noting that global oil stocks declined by another 117 million barrels in April after a 129-million-barrel drawdown in March following U.S. and Israeli attacks on Iran.
"With global oil inventories already drawing at a record clip, further price volatility appears likely ahead of the peak summer demand period," the IEA said.
The IEA said global oil supply fell by another 1.8 million barrels per day (mb/d) in April to 95.1 mb/d, bringing total losses since February to 12.8 mb/d.
Production from Gulf countries affected by the Hormuz disruption remained 14.4 mb/d below pre-war levels, the report showed.
Although higher exports from Atlantic Basin producers provided partial relief, the agency projected global oil supply would still decline by an average of 3.9 mb/d in 2026 to 102.2 mb/d, assuming flows through the strait gradually resume in June.
The IEA also noted that emergency stock releases accelerated in April after member countries agreed in March to release 400 million barrels from strategic reserves. Around 164 million barrels have already reached the market.
"The pace of emergency stock releases picked up in April, with further volumes set to hit the market in the coming months," the agency stated.
The agency revised down its global oil demand forecast for 2026, predicting consumption would contract by 420,000 barrels per day year-on-year to 104 mb/d, which is 1.3 mb/d lower than its pre-war estimate.
The steepest decline is expected in the second quarter of 2026, when global demand is projected to drop by 2.45 mb/d. OECD countries are expected to account for 930,000 barrels per day of the decline, while non-OECD economies make up the remaining 1.5 mb/d.
The petrochemical and aviation sectors have been hit hardest so far, while rising prices, slowing economic conditions, and energy-saving measures are expected to further reduce fuel consumption in the coming months.
The agency now expects global demand to shrink by 2.4 mb/d in the second quarter, compared with its earlier forecast of a 3.5 mb/d contraction before the war erupted.
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