Global Demand Decline
The International Energy Agency (IEA) projected on Wednesday that global average oil demand during the current year will decrease by 2.6 million barrels per day compared to 2025, reaching 102.4 million barrels per day. This comes in the agency's monthly report, released amid ongoing disruptions to global oil supplies resulting from the US-Israeli war on Iran.
Quarterly Movements
The agency forecast a global oil demand decline of 2.5 million barrels per day year-on-year during the fourth quarter of 2026, following a drop of 5 million barrels per day in the second quarter and 3.7 million in the third quarter. It clarified that these developments will lead to a decrease in the global average oil demand during the current year by 2.6 million barrels per day compared to the previous year.
Impact of War and Diesel
The report stated: "In light of the repercussions of the war in Iran, manifested in limited availability of oil products, rising fuel prices, and deteriorating economic prospects, diesel will account for 25 percent of the total decline." It pointed out that although demand is expected to partially recover by 2 million barrels per day in 2027, global average consumption will remain lower by 620,000 barrels per day, or 0.6 percent, compared to 2025 levels.
Supply Fluctuations
Regarding supplies, the report stated that global oil supply increased by 2.5 million barrels per day month-on-month in September, reaching 102.3 million barrels per day, driven by increased production from Gulf states. Despite this increase, the agency forecast a decrease in the global average oil supply during 2026 by 5.8 million barrels per day compared to the previous year, reaching 100.7 million barrels per day.
It is likely that global supply will resume rising by 7.7 million barrels per day in 2027, warning that renewed attacks in the Gulf region make this recovery fragile. On February 28, Washington and Tel Aviv launched a war on Iran, and the latter responded with attacks on Israel and US sites in regional countries, before a ceasefire was reached in April. Subsequently, the US launched attacks on sites inside Iran, amid stalled negotiations between the two countries despite signing a memorandum of understanding in mid-June. The failure of negotiations stems from disputes over navigation in the Strait of Hormuz, one of the most important strategic corridors for global energy and goods supplies.
Source: Anadolu Agency
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