Global oil markets have been hit with fresh concerns about falling inventories amid the supply losses due to the ongoing closure of the Strait of Hormuz, which has removed more than 14 million barrels per day of crude output from global supply.
Declining Inventories
Global inventories declined by another 117 million barrels in April after falling 129 million barrels in March, according to the May 2026 Oil Market Report by the International Energy Agency (IEA).
The agency said that "More than ten weeks after the war in the Middle East began, mounting supply losses from the Strait of Hormuz are depleting global oil inventories at a record pace." Total supply losses from Gulf producers topped 1 billion barrels, with more than 14 million b/d of crude output offline. IEA calls it "an unprecedented supply shock."
Disruptions linked to the Strait of Hormuz had affected oil output from Gulf countries by 14.4 million b/d below pre-war levels, offsetting higher production and exports from the Atlantic Basin.
Demand/Supply Projections
The IEA stated that oil demand is set to outpace supply by 1.8 million b/d this year.
Global oil demand is expected to decline by 420,000 barrels per day (b/d) in 2026, to 104 million barrels per day. On the other hand, global oil supply would drop by an average of 3.9 million b/d to 102.2 million b/d, assuming that the shipments from the Strait of Hormuz will gradually return from June.
Baker Hughes CFO Ahmed Moghal highlighted that the Hormuz may remain closed until the second half of 2026. This uncertainty has already led to the loss of about 10% of global oil supply and disrupted around 20% of global LNG output, marking it as the most severe oil supply disruption recorded to date.
Aramco CEO Amin Nasser warned that global energy markets could face a multi-year disruption if oil shipments through the Strait of Hormuz remain blocked.
Notably, oil output declined in April by 1.8 million b/d to 95.1 million b/d, extending total losses since February to 12.8 million barrels a day.
Demand To Take A Hit In Q2
The agency said the sharpest hit to consumption is concentrated in the second quarter, when demand is forecast to be 2.45 million barrels a day lower than a year earlier. It attributed 930,000 barrels a day of that decline to OECD economies and about 1.5 million barrels a day to non-OECD countries.