The International Energy Agency has sharply downgraded its 2026 global oil supply outlook, warning of an imminent supply shortfall of 1.8 million barrels per day this quarter as the diplomatic standoff in the Middle East remains unresolved. Meanwhile, European gas prices gained ground and regional supply challenges triggered fuel rationing across Russian regions alongside intensifying geopolitical debates on baseline energy infrastructure in the South Caucasus.
Global market
The International Energy Agency (IEA) has slashed its 2026 global oil supply forecast, predicting that global oil output will plunge by 4.3 million barrels per day (bpd) this year as the ongoing closure of the Strait of Hormuz continues to starve international markets. This updated forecast represents a significant downgrade from the 3.7 million bpd decline projected by the agency last month, leaving estimated global supply at 102.02 million bpd. The agency now projects that the global oil deficit will hit 1.8 million bpd this quarter, with annual supply falling 1.27 million bpd short of global demand. This tightening outlook pushed Brent crude prices above USD 89.60 per barrel and West Texas Intermediate (WTI) to USD 83.90 per barrel in early European trade.
This price rally reflects a persistent diplomatic stalemate, with Tehran asserting that the Strait of Hormuz will remain closed until Washington meets its geopolitical demands. Although US Secretary of Energy Chris Wright claimed that regional oil flows have normalized, shipping data contradicts this assertion, showing that tanker transits through the chokepoint fell to a weekly low of just eight vessels on Tuesday. Geopolitical risks in nearby transit corridors deteriorated further after International Maritime Organization (IMO) Secretary-General Mr. Arsenio Dominguez condemned a deadly projectile strike on the Egyptian-owned cargo ship Tihamah in the Bab el-Mandeb Strait, which killed four crew members and two Yemeni rescuers on August 11. Against this backdrop of Persian Gulf instability, European natural gas prices pushed higher as benchmark Dutch front-month futures gained 3.3% to trade at 60 euros per megawatt-hour amid historically low EU storage levels.
Russia & CIS
On the production side, OPEC trimmed its 2026 global oil demand growth forecast by 200,000 bpd to 580,000 bpd, bringing projected total global demand to 105.7 million bpd. OPEC’s monthly report estimated Russia’s July crude oil production at 8.887 million bpd, representing a modest decline of 6,000 bpd from the previous month and remaining well below its OPEC+ deal quota of 9.824 million bpd. Overall, core OPEC+ production expanded by nearly 1.4 million bpd in July to 28.928 million bpd, excluding exempted members and the UAE.
On the domestic retail front, fuel distribution pressures continue to expand into new administrative regions. Lipetsk Governor Igor Artamonov announced that the region will temporarily implement an odd-even gasoline rationing system starting August 13 based on vehicle license plates to manage retail queues and distribute supplies evenly. In the Russian Far East, the Komsomolsk refinery has resumed standard operations following the successful containment of a local fire. Meanwhile, the IMO confirmed that a massive oil slick originating from the stranded Russian-flagged tanker Caroline Bezengi has reached the mainland coast of Oman near Al-Kibliya island. To the south, Azerbaijani President Ilham Aliyev announced plans to expand Azerbaijan’s energy exports to European markets, targeting both hydrocarbons and electricity transit.
Armenia
In Yerevan, geopolitical and environmental debates over baseline atomic infrastructure have intensified following demands from Baku. Arman Yeghoyan, an Armenian Member of Parliament representing the ruling Civil Contract party, officially declared that the operational lifespan of the Metsamor Nuclear Power Plant (NPP) will not be altered, guaranteeing its active status until 2036. He directly rebuked Azerbaijani President Ilham Aliyev’s claims that the plant must be decommissioned, emphasizing that the domestic grid periodically enjoys a healthy electricity surplus.
However, Armenian opposition leaders expressed deep concern over the nation’s strategic energy policy. Ishkhan Sagatelyan, an opposition politician, warned that Azerbaijan and Turkey cannot serve as viable energy alternatives, arguing that Baku’s ultimate goal is to force Armenia into absolute energy dependence. Additionally, opposition politician Farmanian warned that any deterioration in Armenia’s commercial ties with the EAEU would trigger an immediate 20% increase in domestic commodity prices. Highlighting integration friction, Arman Yeghoyan questioned the progress of a unified EAEU gas market, noting that ongoing trade restrictions on Armenian agricultural goods like apricots cast doubt on broader energy accords currently vulnerable to volatile international market price assessments.
🔍 I can prepare a visual map tracking the key shipping detours around the closed Strait of Hormuz to help you evaluate the added shipping times and costs for global oil transits.