Key facts
- Global oil demand is expected to decline by 1 million barrels per day in 2026.
- Asia, particularly China, accounts for the largest decrease in oil consumption.
- U.S. gasoline consumption rose in the second quarter of 2026 despite a 50% increase in pump prices.
- Supply disruptions related to the U.S.-Iran conflict and damaged refineries have impacted oil markets.
- China's reduced oil purchases and use of existing inventory have contributed to lower global demand.
Global oil demand is projected to decrease in 2026, marking the first decline since 2020, according to the International Energy Agency. This drop is attributed to elevated oil prices and supply disruptions, notably those stemming from the conflict involving the U.S. and Iran, which has created uncertainty around shipments through the Strait of Hormuz.
In May, global oil demand averaged 97.9 million barrels per day, a significant decrease from the previous year, with Asia experiencing the most substantial reduction. China's oil consumption fell by 1.5 million barrels per day, representing a 9% decline. This reduction was partly due to China cutting back on oil purchases amid high prices and utilizing its substantial inventory, including a temporary halt in filling its strategic petroleum reserve. The increased adoption of electric vehicles in China also contributed to lower demand for gasoline and diesel.
Despite renewed tensions between the U.S. and Iran, oil prices have not seen a significant spike. A fragile ceasefire in June allowed some oil to re-enter the market, and the ongoing "gray zone conflict" is seen as less of a shock to the market than previous escalations. Furthermore, damage to refineries in Russia and the Middle East has constrained the supply of refined products like gasoline and diesel, keeping their prices elevated longer than crude oil.
In contrast to the global trend, the U.S. has seen an increase in gasoline consumption during the second quarter of 2026. This occurred even as pump prices rose by approximately 50% above prewar levels. Experts suggest that the declining percentage of household income spent on gasoline and a shift from remote work to in-office jobs may be contributing factors to sustained driving habits in the U.S.