IEA Cuts Oil Demand Forecast Amid Ongoing Disruptions

The International Energy Agency (IEA) has reduced its forecast for global oil demand once again due to ongoing disruptions in key waterways. The agency now expects a drop of 1.6 million barrels per day, up from a previous estimate of 510,000 barrels per day. This is the latest in a series of downward revisions, with annual contractions expected to ease from 4.9 million barrels per day in Q2 2026 to 2.8 million barrels per day in Q3 2026.

The IEA notes that global oil supply rose by 2.4 million barrels per day in July but remains 6.3 million barrels per day below year-ago levels, with 8.3 million barrels per day of Gulf output still shut in. Renewed hostilities and maritime disruptions have undermined recovery efforts, reducing projected Q3 2026 oil supply by 1.7 million barrels per day compared to last month's report.

Global oil inventories continue to decline, falling below 7.9 billion barrels in July for the first time since April 2022. Although the market is expected to return to surplus towards the end of this year, risks remain substantial and the urgency of reopening the Strait has increased as previously available inventory buffers are rapidly depleting.