Global Liquified Natural Gas (LPG) shortages is looming as disruptions in Middle Eastern LPG exports and reduced refinery runs have tightened global propane and butane markets, while US LPG exports have surged.
Global oil demand is forecast to contract by 420,000 b/d year-over-year in 2026 to 104 million b/d, according to International Energy Agency (IEA), a downward revision of 1.3 million b/d from the agency’s pre-Iran war forecast.
Mounting supply losses are rapidly depleting inventories while volatility across crude and refined product markets continues to intensify, the International Energy Agency (IEA) said in its May 2026 Oil Market Report.
Global oil demand is now forecast to contract by 420,000 b/d year-over-year in 2026 to 104 million b/d, according to IEA, a downward revision of 1.3 million b/d from the agency’s pre-conflict forecast.
The steepest decline is expected in second-quarter 2026, when demand falls by 2.45 million b/d year-over-year, including declines of 930,000 b/d in OECD countries and 1.5 million b/d in non-OECD economies.
Petrochemical feedstocks and aviation demand have been hit hardest by the disruption. LPG/ethane and naphtha account for roughly half of the 2026 demand downgrade from pre-conflict levels, while jet fuel and kerosene demand weakened sharply as airlines reduced flights in response to higher fuel costs and disruptions across Gulf aviation hubs.
Global oil supply declined by another 1.8 million b/d in April to 95.1 million b/d, bringing total losses since February to 12.8 million b/d, according to IEA. Output from Gulf countries affected by the closure of the Strait of Hormuz remained 14.4 million b/d below pre-war levels. Higher production and exports from Atlantic Basin suppliers provided partial relief to the market. Assuming flows through the strait gradually resume beginning in June, global oil supply is forecast to decline by 3.9 million b/d on average in 2026 to 102.2 million b/d.
Global refinery crude throughputs are expected to plunge by 4.5 million b/d in second-quarter 2026 to 78.7 million b/d and decline by 1.6 million b/d to 82.3 million b/d for the full year as refiners contend with infrastructure damage, export restrictions, and lower feedstock availability. Despite lower refinery runs, refining margins remained at historically high levels, supported by record middle distillate crack spreads.
Meantime, disruptions in Middle Eastern LPG exports have sharply tightened global propane and butane markets. Gulf countries shipped nearly 1.5 million b/d of LPG through the Strait of Hormuz during 2025, but those flows slowed to just 270,000 b/d in April, according to Kpler data. Even with higher exports from Saudi Arabia’s Yanbu terminal and increased shipments from other exporters, the market still faces an estimated shortfall of 1 million b/d.
The US accounted for the largest increase in alternative LPG supply. According to Kpler data, US LPG exports surged by 450,000 b/d from 2025 averages to 2.7 million b/d, representing 69 per cent of total global seaborne LPG supply.
Observed global oil inventories fell by 129 million bbl in March and another 117 million bbl in April. Continued disruptions to seaborne trade through the Strait of Hormuz contributed to a 170 million bbl decline in on-land inventories during April, while oil on water increased by 53 million bbl. OECD on-land inventories fell by 146 million bbl during the month
Oando Energy Foresees Significant Revenue Growth For Nigeria Due To Iran War
Indigenous oil producer Oando Energy, has predicted a surge in revenue for Nigeria, due to the Iran war, which has damaged the Gulf’s reputation as a safe operating environment.
Its Group Chief Executive Wale Tinubu said, challenges in the Strait of Hormuz have shown that “the Middle Eastern premium you got from being a stable environment to produce hydrocarbons has been shattered.
Tinubu, made the projection in an interview with Bloomberg TV on the sidelines of the Africa CEO Forum in the Rwandan capital, Kigali.
The firm, which operates oil and gas facilities in Nigeria’s Niger Delta region, has seen demand from Europe and Asia.
Tinubu projects oil prices will remain in the $70 to $80 range even once hostilities cease, as it will take time for affected oil producers to restore output. The company produced an average 32,500 barrels of oil per day in 2025.
Oando plans to drill seven new oil wells by the end of the year, which will lift output by 10,000 barrels per day, Tinubu said.
To support its growth and acquisition plans, the company aims to raise up to $750 million over the remainder of 2026 through a mixture of debt and some equity.
The company’s operations continue to expand internationally, with a production-sharing contract signed in Angola for an onshore block in the Kwanza Basin.
Oando is also interested in assets across West Africa and as far as Guyana and Suriname, Tinubu said.
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