Oil Demand is expected to decline in 2026 for the first time since the COVID-19 pandemic, the International Energy Agency (IEA) said on Friday. The agency linked the forecast to the conflict involving Iran, which has disrupted oil production and exports across the Middle East.
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The Paris-based agency projected that global oil demand will fall by 1 million barrels per day compared with 2025. As a result, 2026 could mark the first annual contraction in demand since 2020.
The IEA said the decline mainly reflects disruptions caused by the closure of the Strait of Hormuz. The strategic waterway handles a significant share of the world’s oil and gas shipments. Consequently, restricted tanker traffic has reduced exports from the Persian Gulf.
However, the agency said oil markets could recover if the ceasefire holds and shipping through the strait gradually resumes. Even so, it warned that renewed fighting could quickly reverse any improvement.
The report stated that the global oil market may return to a supply surplus later this year. Nevertheless, that outlook depends on producers restarting operations and refiners restoring fuel shipments as tanker movements normalize.
Furthermore, the IEA warned that recent military exchanges between the United States and Iran have increased uncertainty. Therefore, it stressed that a lasting peace agreement remains essential to stabilize global energy markets.
Meanwhile, oil prices moved slightly lower on Friday. Brent crude for September delivery fell to $76.25 per barrel, while U.S. West Texas Intermediate crude traded at $72.09 per barrel.
