Global oil demand to contract in 2026 – IEA
The Paris-based International Energy Agency (IEA) now expects global oil demand to decline by 1.1 million b/d in 2026 – stopping short of providing an average forecast for the scale of the decline in global oil demand growth.
IMAGE: Oil storage tanks. Getty Images
Global oil demand is expected to contract as the impacts of nearly four months of geopolitical disruption in the Middle East spread across products and regions, the IEA said.
“This is a downgrade of 700 kb/d [700,000 b/d] compared with last month’s report,” the energy agency said.
The revision in demand forecast comes shortly after the US and Iran signed an interim peace deal to end all regional hostilities, including Lebanon.
“If the deal holds, exports and production from the Gulf should see a gradual recovery – not least because Iranian oil exports can fully resume once the US blockade is lifted,” the IEA said.
The IEA estimates global oil demand to return to growth in 2027. Global oil demand is projected to rise by a relatively modest 2 million b/d to 105.3 million b/d, it said.
Supply estimates
Global oil supply plummeted by 600,000 b/d to 94.5 million b/d in May, amid continued attacks on Middle Eastern energy infrastructure and restrictions to vessel transits through the Strait of Hormuz, the IEA noted in its monthly Oil Market Report (OMR).
The Middle East war has severely affected output from Gulf countries such as Iraq, Qatar, Kuwait, the UAE and Saudi Arabia, which is currently about 13.6 million b/d below pre-war levels. “While the US‑Iran interim agreement paves the way for a rebound in Middle East exports, operational and political constraint,” the IEA said.
Global oil supply is expected to decline by 3.9 million b/d to 102.4 million b/d this year, before rebounding by 8 million b/d to 110.3 million b/d in 2027, according to the IEA’s estimates.
The increase in supply next year “may provide a welcome respite to the market and an opportunity to replenish depleted inventories, or to build new strategic reserves,” the energy agency added.
By Aparupa Mazumder
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