IEA Slashes Global Oil Demand Forecast Amid Ongoing Middle East Tensions
The International Energy Agency (IEA) has revised its global oil demand forecast downward for the second time this year, citing ongoing tensions in the Middle East as a major contributor to the decline.
In its latest monthly report, the IEA warned that the 'impasse in negotiations between the United States and Iran' and renewed attacks in the region will hinder the normalization of oil flows. The agency now predicts a 2.5 million barrel-per-day drop in global oil consumption by 2026 compared to 2025, a steeper decline than its previous forecast of 1.6 million barrels.
The IEA's revised prediction comes as oil prices have surged above $100 per barrel this week due to attacks on Iranian oil tankers and concerns over further disruptions to supply in the Middle East. UK gas prices have also reached a near four-year high, sparking fears of soaring energy costs over the winter months.
The agency highlighted the sharp rise in diesel prices, which have surpassed $200 per barrel in some markets, with Europe and Asia experiencing similar increases. The IEA cautioned that supplies will be lower than initially feared due to ongoing conflicts in the Middle East and Ukraine, with a 'full recovery in supplies from Middle East producers deferred until 2027.'