IEA Predicts First Decrease in Global Oil Demand Since 2020
The International Energy Agency predicts a global decline in oil demand for 2026, the first since the 2020 pandemic. This forecast is largely attributed to geopolitical instability in the Middle East and the ongoing closure of the Strait of Hormuz.
Why it matters
A decrease in oil demand signals significant shifts in global energy markets and potential economic impacts due to regional conflict.
Global oil demand could decrease for the first time since 2020, following months of oil trade restrictions in the Middle East and ongoing geopolitical turmoil, the International Energy Agency IEA said on 10th July. This expectation is echoed in OPEC's most recent 2026 global oil demand growth forecast. The global demand for oil is expected to fall by around 1 million bpd year-on-year in 2026, which would be the first annual decline since that which was experienced during the Covid-19 pandemic in 2020, according to a recent IEA report. The IEA blames the decline on the U.S.-Israeli-led war on Iran and resulting geopolitical unrest across the Middle East. A large proportion of the world's oil supply has been disrupted for several months, following the closure of the Strait of Hormuz a key trade corridor connecting the Persian Gulf with the Gulf of Oman and the Arabian Sea.
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