IEA Slashes Global Oil Demand Forecast Amid Ongoing Conflict
The International Energy Agency (IEA) has further reduced its forecast for global oil demand this year, citing the recent escalation in the Middle East war and resurgent energy prices. The Paris-based agency now sees a 2.5 million barrels per day decline in consumption from last year, surpassing its August forecast of a 1.6 mb/d drop.
Crude prices have remained above pre-war levels, with the recent US and Israeli attacks on Iran contributing to higher costs. The IEA warned that diesel prices are soaring due to refining constraints, particularly in the Gulf region where facilities have been damaged. This has driven up fuel costs for key industrial and transport fuels.
The agency also highlighted the impact of Ukrainian strikes on Russian refineries and energy targets, which is further driving up global fuel prices. The IEA stated that 'the need for progress in resolving the conflict in the Middle East, and the Russia-Ukraine war, is greater than ever to avoid further market tightening and demand destruction.'
The recent escalation in the Middle East has led to renewed attacks on oil infrastructure, hampering normalisation of oil flows. The IEA's revised forecast reflects this ongoing uncertainty and potential for future disruptions.