Oil prices swing wildly amid latest Gulf tensions, IEA says durable ceasefire is needed for stabilization
Supply rebound
The surge in crude shipments helped push global observed inventories higher for the first time since the war began, with oil held on water climbing by 117 million barrels, more than offsetting a 96 million barrel drawdown in onshore stocks, of which 44 million barrels came from government reserve releases.
While crude supply has recovered relatively quickly, refined product markets have not kept pace. Gulf exports of refined fuels and LPG remained at less than half their pre-war volumes in June, compared with crude flows running at nearly three-quarters of February levels, and key export refineries in the region have yet to restart operations.
Ukrainian strikes on Russian refining and export infrastructure have added further strain, disrupting both exports and domestic fuel supplies. The mismatch between well-supplied crude markets and constrained product markets pushed refining margins to four-year highs by early July, with gasoline cracks rising sharply even as earlier fears over jet fuel shortages eased.
Demand outlook
Global oil demand bottomed out in May at 97.9 million barrels a day, down 5.3 million barrels a day year-on-year but is forecast to climb by more than 8 million barrels a day by October as peak summer travel and pent-up demand feed through, putting consumption above 2025 levels for the first time since February.
Even so, the agency still expects overall demand to decline by 1 million barrels a day for 2026 as a whole before growing by 2 million barrels a day in 2027, a slower two-year pace of expansion than historical norms.
