IEA Slashes Oil Demand Forecast Amid Ongoing Middle East Tensions

The International Energy Agency (IEA) has cut its forecast for global oil demand in 2026, citing prolonged tensions between the US and Iran as a major factor. The IEA predicts that global oil demand will decline by 2.5 million barrels per day in 2026, up from its previous estimate of 940,000 barrels per day.

Global oil production fell by 1.6 million barrels per day in August, with over 10 million barrels per day of Gulf output remaining shut due to heightened security risks. The IEA also reported a significant decline in global observed oil inventories, which plummeted by 95 million barrels in August.

The agency warned that the buffers are shrinking and the global refining system is stretched to the limit, emphasizing the urgent need to resolve the conflicts in the Middle East and Russia-Ukraine to prevent further tightening of the oil market and destruction of demand.