IEA sees major oil demand decline in 2026 outlook
Global oil demand is projected to decline by 80,000 barrels per day (80 kb/d) on average in 2026, reversing earlier expectations of 730 kb/d growth, as the Iran conflict disrupts global energy markets, the International Energy Agency (IEA) said on Tuesday.
In its latest Oil Market Report, the IEA said demand is expected to fall by 1.5 million barrels per day (1.5 mb/d) in the second quarter of 2026, marking what it described as the steepest drop since the COVID-19 pandemic sharply reduced fuel consumption, News.Az reports, citing foreign media.
It warned that continued scarcity and elevated prices could further suppress demand.
The agency also reported a major supply shock, stating that global oil supply dropped by 10.1 mb/d to 97 mb/d in March, driven by ongoing attacks on energy infrastructure in the Middle East and restrictions on tanker movement through the Strait of Hormuz.
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It added that disruptions to crude flows and infrastructure damage have tightened global product markets, with global crude processing (“crude runs”) forecast to decline by 1 mb/d on average in 2026 to 82.9 mb/d.
According to the report, global observed oil inventories fell by 85 million barrels in March, while stocks outside the Middle East Gulf declined by 205 million barrels as flows through the Strait of Hormuz were significantly reduced. Oil prices also recorded their largest-ever monthly gain in March following what the agency called an unprecedented supply shock.
The IEA noted that a recent two-week ceasefire between the United States and Iran provided temporary relief to oil markets. However, it cautioned that uncertainty remains over whether the truce will lead to lasting peace and a normalization of shipping through the Strait of Hormuz.
The agency emphasized that restoring stable flows through the Strait of Hormuz remains the most critical factor in easing pressure on global energy supply, prices, and the broader economy.
The statement comes after U.S. President Donald Trump threatened to block ships entering or leaving the Strait of Hormuz. Subsequently, U.S. Central Command announced that U.S. forces would begin enforcing restrictions on “all maritime traffic entering and exiting Iranian ports” starting Monday at 10 a.m. Eastern Time (1400 GMT).
By Nijat Babayev
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