High fuel prices and restricted shipping through key oil route weigh on global consumption…
The International Energy Agency has sharply lowered its forecast for global oil demand in 2026, citing the continued disruption of shipping through the Strait of Hormuz and elevated fuel prices.
In its latest monthly report released on Wednesday, the agency projected that global oil demand would decline by 1.6 million barrels per day this year, up from the one million barrels per day decline forecast in July.
The IEA said the prolonged closure of the Strait of Hormuz, coupled with high fuel prices, was continuing to put pressure on oil consumption.
The disruption followed the conflict between the United States, Israel and Iran, which damaged oil infrastructure across parts of the Gulf and led to the effective shutdown of tanker and cargo traffic through the strategic waterway.
The Strait of Hormuz normally handles about one-fifth of global oil supplies, making the disruption a major factor behind recent volatility in international crude markets.
Despite reports of a ceasefire and repeated indications that an agreement to reopen the strait could be reached, the IEA said only a limited number of vessels had been allowed to pass through.
The agency said the uncertainty had contributed to continued fluctuations in global oil prices.
Meanwhile, global oil supply increased by 2.4 million barrels per day in July to 101.5 million barrels per day. Despite the monthly increase, supply remained 6.3 million barrels per day below the level recorded a year earlier.
The IEA said renewed hostilities and maritime disruptions in July and early August had undermined efforts to restore global supply.
It now expects global oil supply to decline by an average of 4.3 million barrels per day in 2026, before recovering next year.
On demand, the agency expects consumption to resume growth in the fourth quarter, although the overall outlook for the year remains significantly weaker than previously projected.
