IEA Downgrades Global Oil Demand Forecast Amid Middle East Conflicts

The International Energy Agency (IEA) has revised its global oil market outlook for 2026 due to ongoing conflicts in the Middle East and the Russia-Ukraine war. Oil demand is forecast to decline by 2.5 million barrels per day, a contraction of 940,000 bpd from previous projections.

This sharp revision in demand was partly attributed to the delayed normalization of oil flows between the United States and Iran. The IEA expects global oil supply to average 100.7 million bpd in 2026, representing a year-on-year decline of 5.7 million bpd.

Russian-Ukraine war and Middle East conflicts have disrupted crude and refined-product supplies, with oil exports from Gulf countries averaging nearly half their pre-war level. Diesel prices crossed $200 per barrel in the US in early September, approximately 94% above pre-war levels.