Global Oil Demand to Drop 1.6mb/d by 2026, IEA Reports

The International Energy Agency (IEA) has projected that global oil demand will decrease by 1.6 million barrels per day (mb/d) in 2026, which is 510,000 barrels more than earlier estimates. This decline is attributed to the prolonged closure of the Strait of Hormuz and elevated fuel prices that are suppressing worldwide consumption.

The IEA's Oil Market Report for August indicates that demand contractions will ease from 4.9 mb/d in the second quarter to 2.8 mb/d in the third quarter, with a return to growth expected in the final quarter of the year. Global oil output rose by 2.4 mb/d to 101.5 mb/d in July but remains 6.3 mb/d below levels from the previous year, with 8.3 mb/d of Gulf production still offline.

The report also highlights that geopolitical tensions, particularly the breakdown of the Iran-US ceasefire, have negatively impacted supply recovery efforts. The urgency to reopen the Strait of Hormuz is emphasized as inventory buffers are rapidly depleting.