The International Energy Agency expects global oil demand in 2026 to fall more than previously forecast, amid continued supply disruptions and a delay in the anticipated oil flow normalization into the next year due to stalled negotiations between the US and Iran to end the war in the Middle East.
In its September oil market report published Friday, the IEA said global oil demand is now projected to decrease by 2.5 million barrels per day on average this year, 940,000 barrels per day higher than its forecast a month ago, as persistently high fuel prices weigh on consumption. The pace of decline in demand, however, is estimated to ease in the third and fourth quarters before, after which demand is expected to recover by 2.6 million barrels of oil per day in 2027
Meanwhile, global supply is now projected to drop by 5.7 million barrels of oil per day in 2026, to 100.7 million barrels per day on average, before rebounding in the next year.
"Inventories have so far played a crucial role in balancing the market. Since the start of the war, global observed oil inventories have fallen by 507 mb, equal to an average draw of 2.8 mb/d. August alone saw stocks fall by a steep 95 mb, or 3.1 mb/d," the IEA noted. "With buffers shrinking and the global refining system stretched to the limit, the need for progress in resolving the conflict in the Middle East - and the Russia-Ukraine war, which is now in its fifth year - is greater than ever to avoid further market tightening and demand destruction."