The International Energy Agency (IEA) has sharply lowered its forecast for global oil demand in 2026, citing the continued closure of the Strait of Hormuz and high fuel prices as major factors weighing on consumption.
In its latest monthly report, the Paris-based agency said global oil demand is now expected to decline by 1.6 million barrels per day (mb/d) this year.
That is significantly worse than the 1 million barrels per day decline projected in its July report.
Hormuz Closure Weighs on Global Oil Market
The IEA said the continued disruption around the Strait of Hormuz has contributed to higher oil and fuel prices, making it more expensive for consumers and businesses.
The strategic waterway is a major route for global energy supplies, with around one-fifth of the world’s oil supply normally passing through it.
“The ongoing closure of the Strait of Hormuz and elevated fuel prices continue to weigh on oil consumption,” the IEA said.
The disruption followed the US and Israeli attacks on Iran in late February, which triggered a conflict that damaged oil infrastructure in several Gulf countries.
Iran subsequently restricted tanker and cargo traffic through the Strait of Hormuz, creating further uncertainty in global energy markets.
Although there have been claims of a ceasefire and repeated suggestions that the strait could soon reopen, the IEA said only a limited number of ships have been allowed through.
The uncertainty has contributed to volatility in global oil prices.
Global Oil Supply Also Under Pressure
The IEA said global oil supplies increased by 2.4 million barrels per day in July, reaching 101.5 mb/d.
However, that figure remained 6.3 million barrels per day below the level recorded a year earlier.
The agency said renewed hostilities and disruptions to maritime activity in July and early August had weakened efforts to restore global supply.
It now expects global oil supply to decline by an average of 4.3 million barrels per day this year before recovering in 2027.
Despite the sharp reduction in its annual demand forecast, the IEA expects global oil consumption to return to growth during the fourth quarter of 2026.
Source : AFP
