IEA predicts world oil demand to fall by 1 million barrels per day in 2026
The International Energy Agency says global oil demand will drop by about 1 million barrels per day in 2026, the first annual decline since 2020, as conflict in the Middle East disrupts supplies.
Global oil demand is projected to fall by roughly 1 million barrels per day in 2026, marking the first yearly decrease since the pandemic-driven slump of 2020, the International Energy Agency (IEA) reported on Friday. The agency attributes the contraction to disruptions caused by the ongoing war between the United States and Iran, which has hampered production and exports in the region, especially after the closure of the Strait of Hormuz, a key shipping lane for oil and gas.
The IEA noted that the decline is uneven across product types and regions, with the Middle East most affected. While the agency sees a gradual recovery ahead, it warned that renewed fighting could further cloud the outlook. Its forecast assumes a cease-fire and a step-wise reopening of the strait, conditions that have become increasingly uncertain as hostilities have resumed and tanker traffic has slowed.
"While the global oil market balance looks set to swing back to surplus towards the end of the year, the forecast hinges on the assumption that tanker flows through the Strait will gradually recover, allowing producers to restart fields and refiners in the Middle East and elsewhere to resume product shipments," the IEA wrote.
"Renewed exchanges of fire in the Gulf this week highlight the risks of not reaching a lasting peace agreement, which is a must for the normalization in oil markets," the agency added.