Observed global oil inventories fell by 250 million barrels in March and April, equal to about 4 million barrels per day, as restricted tanker traffic through the Strait of Hormuz removed more than 14 million barrels per day from the market, the IEA reported.
The agency said producers outside the Middle East, along with emergency stock releases and rerouted Gulf exports, have helped narrow the supply gap, but not enough to prevent continued market deficits through most of 2026.
For the nonresidential construction industry, oil-linked product markets remain vulnerable, with possible ripple effects for diesel, petrochemical-based materials, and freight costs during the peak summer building season.
The global oil market is burning through inventories at a record pace as supply losses tied to the Strait of Hormuz disruption top 1 billion barrels, according to the International Energy Agency’s (IEA) May 2026 Oil Market Report.
The shock is historic in scale, with more than 14 million barrels per day of oil shut in, creating a global supply disruption.
What follows is the outcome of our reading of the report and what it means for US nonresidential construction.
Weeks after war in the Middle East began, the IEA said the market is still struggling to replace missing barrels from the Gulf even as producers and consumers adjust.
"The world is drawing oil inventories at a record pace as importing countries confront unprecedented disruptions to Middle Eastern supply," the report stated.
North Sea crude, a key benchmark, swung from a peak of $144 per barrel to below $100 before rebounding to around $110 at the time the report was written. The volatility reflects conflicting signals over whether the United States and Iran can reach an agreement to reopen the Strait and end the conflict.
While existing oil supplies and curbed demand helped prevent an even worse crisis, the pre-crisis inventories are dwindling.
[Read Higher Energy Costs Will Hurt Everyone, But Not Equally from ConstructConnect Chief Economist, Michael Guckes]
The current, global oil supply-demand gap is smaller than the raw figure suggests because the market entered the oil crisis with a surplus and both producers and consumers have moved quickly to respond. In other words, it could have been worse. Here's why.
The IEA’s Total Global Observed Inventories data shows global oil supplies starting 2026 at relatively elevated levels before turning sharply lower as the Middle East conflict disrupted flows through the Strait of Hormuz.
IEA data show total global observed oil inventories dropping sharply in March and April 2026, with combined draws of 246 million barrels pushing stocks down to about 7.9 billion barrels as Hormuz-related supply disruptions intensified. Image: International Energy Agency, Oil Market Report, May 2026
The agency said observed oil inventories fell by 129 million barrels in March and another 117 million barrels in April, leaving total global stocks at about 7.9 billion barrels.
That rapid drawdown underscores how quickly the market’s pre-crisis cushion is being eroded even as emergency stock releases and higher Atlantic Basin exports help offset part of the supply shock.
"The world is drawing oil inventories at a record pace as importing countries confront unprecedented disruptions to Middle Eastern supply."
International Energy Agency, Oil Market Report, May 2026
Saudi Arabia and the United Arab Emirates have redirected some exports to terminals outside the Strait, while consuming nations have released barrels from both commercial and strategic storage.
At the same time, oil production growth outside the Middle East accelerated. The IEA raised its 2026 supply growth outlook for the Americas by more than 600,000 barrels per day since the start of the year, to an average of 1.5 million barrels per day.
Atlantic Basin crude exports have also surged. Since February, shipments headed mainly to East of Suez markets have climbed by 3.5 million barrels per day, with large gains from the United States, Brazil, Canada, Kazakhstan and Venezuela, according to the report.
Russia has increased crude exports as refinery attacks reduced domestic processing needs, while the United States temporarily waived sanctions on Russian oil on water, the IEA said.
The report said the market adjustment is not happening only on the supply side, as refiners and end-use demand have weakened.
Refiners have cut activity sharply and scaled back crude imports, signaling a reduction in anticipated demand.
Chinese seaborne crude imports fell by 3.6 million barrels per day from February to April, according to Kpler data cited by the IEA. Imports also dropped by 1.9 million barrels per day in Japan, 1 million barrels per day in Korea and 760,000 barrels per day in India.
Globally, refinery activity in April was down by about 5 million barrels per day from a year earlier. That has temporarily reduced pressure in the crude market, but the IEA said tightness is now spreading into refined products.
End-use demand is also weakening. The IEA now expects global oil demand to contract by 2.4 million barrels per day year over year in the second quarter and to decline by 420,000 barrels per day for 2026 overall. That is 1.3 million barrels per day weaker than its pre-conflict forecast.
The biggest losses are showing up in petrochemicals, where feedstock availability is tightening, while aviation activity remains below normal and is easing some pressure on jet fuel markets.
The IEA says tightness is spreading into product markets even as emergency stock releases, rerouted Gulf exports, and higher Atlantic Basin shipments help narrow part of the supply gap.
For contractors and suppliers, that raises the possibility of renewed pressure on diesel, freight, and petrochemical-based inputs during the peak summer building season.
Construction costs and oil prices share a link. As ConstructConnect Chief Economist recently wrote, "Oil prices have historically been a key driver of construction costs." Guckes added, "...construction firms should continue to be vigilant in their cost control efforts..."
Vigilance in cost control efforts may need to be an ongoing effort, as the IEA report also said the oil market is likely to remain in deficit until the final quarter of the year.
Even if a diplomatic breakthrough allows oil stocks to flow freely through the Strait of Hormuz gradually in the third quarter, the IEA expects supply to recover more slowly, suggesting downstream markets and trade flows may take longer to stabilize.
For owners, estimators and general contractors, that leaves oil-linked cost risk firmly in play, as budgets and margins already stand in an uncertain pricing environment.
The IEA said oil demand could return to growth later in the year if a deal is reached that allows flows through the Strait of Hormuz to resume gradually in the third quarter. Supply, however, is likely to recover more slowly.
Until that happens, the market will remain dependent on rerouted exports, emergency inventories, and rising output from producers outside the Middle East.
For construction decision-makers, the takeaway is that as global inventories draw down and typical summer demand builds, oil-linked cost risk remains firmly in play.
The IEA, founded in 1974 to coordinate responses to oil supply disruptions, is a global energy agency that provides analysis, data and policy guidance on secure, affordable and sustainable energy. The United States is one of the founding member countries of the organization that collectively represent approximately 75 percent of global oil demand.
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