Key facts
- IEA forecasts a 1.56 million b/d decline in global oil demand for 2026.
- This represents a downward revision of 510,000 b/d from previous forecasts.
- Demand contracted by 4.9 million b/d in the second quarter of 2026.
- Global oil demand is projected to grow by 2.4 million b/d in 2027.
- Global oil supply is projected to fall by 4.3 million barrels per day in 2026.
The International Energy Agency (IEA) has revised its global oil demand forecast downwards for 2026, anticipating a larger contraction than previously estimated. Persistent disruptions to exports via the Strait of Hormuz and elevated fuel prices are cited as key reasons for this adjustment.
In its latest Oil Market Report, the IEA now projects that global oil demand will decline by 1.56 million barrels per day in 2026, an increase of 510,000 barrels per day compared to its prior forecast, bringing the total demand to 103.29 million barrels per day. The agency noted that demand contracted by 4.9 million barrels per day year-on-year in the second quarter of 2026, with this contraction expected to ease to 2.8 million barrels per day in the current quarter. A return to growth is anticipated in the final three months of the year, with an increase of around 580,000 barrels per day.
Looking ahead to 2027, the IEA forecasts global oil demand to grow by 2.4 million barrels per day, reaching 105.7 million barrels per day. This projection is based on the assumption of a de-escalation in tensions between the US and Iran, which would allow for a gradual recovery in oil flows. A recovery in traffic through the Strait of Hormuz would reverse the projected annual supply contraction of approximately 4.3 million barrels per day in 2026 into supply growth of 8.3 million barrels per day in 2027. Consequently, a projected supply deficit of 1.3 million barrels per day in 2026 is expected to transform into a surplus of 4.6 million barrels per day in 2027, enabling countries to rebuild strategic and commercial oil stocks. The IEA warned that a potential supply overhang of up to 4 million barrels per day from the fourth quarter of 2026 could see global stocks return to February 2026 levels by mid-2027 and exceed them by 1 billion barrels by the end of 2027. The agency also highlighted that the global stocks drawdown rate was 2.7 million barrels per day between February and July, leaving observed stocks below 7.9 billion barrels for the first time since April 2025. The ongoing supply disruptions through the Strait of Hormuz are prompting countries to enhance their oil storage capacity as a safeguard against future supply shocks.