IEA: Global Oil Demand to Fall 2.5M bpd Amid High Prices


   
   SECAUCUS, NJ (DTN) -- World oil consumption is projected to plunge by 2.5 
million bpd year-on-year in 2026 as surging fuel prices and chronic product 
shortages triggered by the prolonged Middle East conflict leads to demand 
destruction, the International Energy Agency (IEA) reported Friday (9/11).

   "Steep losses of petrochemical feedstocks and refined product supplies, 
along with higher fuel prices, notably for diesel, will continue to weigh on 
consumption", and force refinery cutbacks in major Asian import markets, the 
IEA said its September monthly report.

   The 2.5 million bpd demand decline forecast by the Paris-based global energy 
watchdog is significantly steeper than the 1.6 million bpd drop it estimated in 
August. The projection came as both the world's leading crude oil benchmarks -- 
North Sea Brent and U.S. West Texas Intermediate -- rose above $100 bbl this 
week, recapturing the three-digit levels they traded at in April and May, 
respectively.

   Reports that Iran was in negotiations with Gulf states to establish a 
jointly managed shipping route through the Strait of Hormuz weighed on prices. 
At the same time, however, physical oil supply disruptions and risks to flows 
have continued to grow. Ship tracking data showed that daily transits of the 
oil chokepoint fell back into the single digits on Thursday.

   Global observed oil stocks drew down by 95 million bbl in August alone, 
bringing cumulative global inventory draws since February to 507 million bbl, 
the IEA observed. Oil on water declined by 65 million bbl as Middle East 
maritime traffic suffered renewed attacks.

   "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 -- is greater than ever to avoid further market 
tightening and demand destruction," the report added.

   With the diplomatic standoff between Washington and Tehran delaying any 
normalization of Persian Gulf oil flows into 2027, the IEA also projected a 
wider global supply deficit this year -- at 1.74 million bpd, versus its prior 
estimate of 1.27 million bpd. Total global oil production is set to drop by 5.7 
million bpd year-on-year to 100.7 million bpd, the agency added.

   Despite record-high Atlantic Basin refining margins and wide crack spreads, 
global refining capacity remains constrained by crude availability. August 
refinery throughput remained down 4.2 million bpd year-on-year at 81.4 million 
bpd, with full-year global refinery runs forecast to drop by 2.6 million bpd.




(c) Copyright 2026 DTN, LLC. All rights reserved.