Oil & Energy
IEA Says Global Oil Demand to Rebound Next Year After Declining in 2026
The International Energy Agency on Friday said seasonal trends and a rebound in fuel supplies are lifting consumption from May lows, with global oil demand forecast to fall by 1 million barrels a day this year before rising by 2 mmbbl/d in 2027.By October, global oil demand is expected to rise by over 8 mmbbl/d from the May low of 97.9 mmbbl/d, moving above 2025 levels for the first time since February.Higher fuel use during the peak summer travel season will be compound the strength of existing pent-up demand resulting from the months-long closure of the Strait of Hormuz, the IEA said in its monthly oil report for July published Friday.However, projected growth in demand next year, combined with an overall dip in 2026, is expected to result in "a two-year pace of expansion well below historical trends", the agency said.In June, global oil supply staged a sharp recovery, rising by 4.1 mmbbl/d to 98.8 mmbbl/d as a resumption of oil flows through the Strait of Hormuz partly revived production in the Gulf.Global observed oil stockpiles increased by 21 million barrels in June, the first rise in four months, boosted by a sharp rise in oil on water volumes, which more than made up for continued withdrawals from onshore reserves.Oil on water rose by 117 million barrels while continued drawdowns in onshore stocks were about 96 million barrels, comprising of 44 million barrels of OECD government reserves.Despite this recovery, global output was still 9.4 mmbbl/d lower than pre-war levels and heading for an average 3.7 mmbbl/d decline to 102.6 mmbbl/d this year "contingent on a swift de-escalation of renewed hostilities." Oil supply is expected to rise by 7.5 mmbbl/d in 2027 if transit volumes improve, IEA said.The IEA said the global oil market could return to a surplus towards the end of the year, assuming a gradual recovery in tanker flows through the Hormuz Strait that enables producers to restart oil fields and refineries in the Middle East and elsewhere and restart product shipments."An escalation in hostilities on 7-8 July, however, clouds the outlook and could upend the forecast that sees the market flipping to a surplus next year," the IEA said.Total Gulf oil exports, including the non-Hormuz shipments, rose by 6.5 mmbbl/d in June to 16.1 mmbbl/d, but remained below the pre-war average of 24 mmbbl/d. Gulf production increased by 3.5 mmbbl/d to a level about 11.4 mmbbl/d lower than pre-war levels.Increased Ukrainian strikes on Russian refineries and export infrastructure have disrupted product markets in the country and beyond, shrinking both exports and domestic fuel provision.
