Global oil demand expected to decline by 1.6 mb/d in 2026, expand by 2.4 mb/d in 2027: IEA

PARIS: World oil demand is forecast to decline by 1.6 mb/d in 2026, 510 kb/d more than estimate in last month’s report, as the ongoing closure of the Strait of Hormuz and elevated fuel prices continue to weigh on oil consumption, according to the International Energy Agency (IEA) Oil Market Report (OMR) for August, released on Wednesday (August 12, 2026).

The monthly report noted that annual contractions will nevertheless ease from 4.9 mb/d in 2Q26 to 2.8 mb/d in 3Q26, before returning to growth in the final quarter. Global oil demand is projected to expand by 2.4 mb/d in 2027.

Global oil demand is now expected to decline by an average of 1.6 mb/d this year. Demand is projected to contract by 4.9 mb/d in 2Q26 and 2.8 mb/d in 3Q26, before flipping to growth of 580 kb/d in 4Q26.

The global oil balance is now expected to show a deficit of 1.8 mb/d in 3Q26, more than double the estimate of around 800 kb/d in last month’s Report.

After some brief respite in June, global observed oil inventories plunged by 69 mb, or 2.2 mb/d, in July, dragged lower almost entirely by a drop in oil on water.

By the end of July, observed stocks had fallen below 7.9 billion barrels for the first time since April 2025. Cumulative stock draws between the end of February and the end of July reached 410 mb, or 2.7 mb/d on average.

Although the market is projected to return to surplus towards the end of this year, risks remain substantial and the urgency of reopening the Strait has increased, as previously available inventory buffers are rapidly depleting.

Global oil supply is now forecast to fall by 4.3 mb/d in 2026, to 102 mb/d, as growth of 1.4 mb/d from the Americas only partly offsets losses in the Middle East and Russia.

Global oil supply is now projected to decline by 4.3 mb/d on average in 2026 and rebound by 8.3 mb/d next year to 110.3 mb/d.