IEA and OPEC Clash on Oil Demand Forecasts Amid Strait of Hormuz Tensions

The International Energy Agency (IEA) and OPEC have released opposing forecasts for global oil demand in 2026, highlighting the ongoing impact of the war on energy markets. The IEA now expects a decline in global oil demand by 1.6 million barrels per day (mb/d) next year, marking its first such call since the Covid-19 pandemic. This downgrade is attributed to the ongoing closure of the Strait of Hormuz and elevated fuel prices.

OPEC still forecasts growth in demand, but has trimmed its estimate for a fourth consecutive month to 580,000 b/d from 780,000 b/d. The difference between these numbers implies a gap of approximately 2.2 mb/d in what the world will burn this year.

The supply picture is equally concerning, with global production remaining 6.3 million barrels short of pre-war levels. Gulf production climbed to 23.9 mb/d, but regional exports fell by 2.1 mb/d due to the closure of the Strait of Hormuz and subsequent attacks on tankers and infrastructure.

Despite these challenges, both OPEC and the IEA agree that demand will grow in 2027, with OPEC expecting an increase of 2.2 mb/d and the IEA forecasting a rise of 2.4 mb/d.