IEA sees 2026 oil demand falling by 1mn barrels a day
The agency said the outlook depends on a ceasefire and a gradual restart of tanker flows through the Strait of Hormuz.
By Sarah Jenkins · Chief Macro Economics Correspondent
· 3 min read
Global oil demand is on course to fall by 1 million barrels a day in 2026 from a year earlier, the International Energy Agency said Friday, putting consumption on track for its first annual decline since the pandemic year of 2020. The agency linked the contraction to the Iran war’s disruption of Middle East production and exports, while oil prices were little changed to lower in Friday trading.
In its latest oil market report, the IEA said the decline was highly concentrated by both fuel type and geography. The agency said the closure of the Strait of Hormuz, a critical route for oil and gas shipments from the Persian Gulf, had interrupted export flows and affected supply chains across the region.
The forecast depends on a ceasefire holding and on a phased reopening of the strait, according to the IEA. That assumption has become less certain after the U.S. and Iran exchanged hostilities this week, with several ships attacked and traffic through the waterway again reduced sharply, CNBC reported.
The Strait of Hormuz functions as a chokepoint because tankers carrying crude and refined products from Gulf producers must pass through it to reach global buyers. When traffic is halted or slowed, producers can be forced to stop output at fields, while refineries and exporters may be unable to move products to customers. The IEA said normalization would require tanker flows to recover enough for producers and refiners to restart operations and shipments.
“While the global oil market balance looks set to swing back to surplus towards the end of the year, the forecast hinges on the assumption that tanker flows through the Strait will gradually recover, allowing producers to restart fields and refiners in the Middle East and elsewhere to resume product shipments,” the IEA wrote.
The agency added that renewed fighting in the Gulf underscored the risk that the market may not stabilize without a durable peace agreement.
Market balance may shift back toward surplus
Toril Bosoni, the IEA’s head of oil industry and markets, told CNBC’s “Squawk Box Europe” that the recovery would not be “swift or linear,” citing what she called a very uncertain and unstable regional situation.
Bosoni said output growth from producers outside the affected region, combined with demand levels below prewar expectations, could allow the market to return to surplus by the end of this year and into next year. She said that would ease pressure on the market and help countries rebuild inventories.
Brent crude futures for September delivery slipped to $76.25 a barrel on Friday, while U.S. West Texas Intermediate crude futures were steady at $72.09, according to CNBC.
Diplomatic signals remained mixed. MS Now reported Thursday, citing a U.S. official, that Washington would take part in technical talks with Iran and remained committed to seeking a resolution despite recent airstrikes by both countries. The official said President Donald Trump had described Iran’s attacks on commercial vessels as “acts of terrorism,” according to MS Now.
Trump said at the NATO summit in Ankara, Turkey, that the ceasefire with Iran was “over,” CNBC reported. The IEA said renewed exchanges of fire this week highlighted the risk to its forecast if a lasting peace agreement is not reached.
This story draws on original reporting from CNBC Markets.
