The International Energy Agency (IEA) on Friday cut its forecast for global oil demand in 2026, citing the prolonged impasse in U.S.-Iran negotiations, which has pushed back prospects of a normalization of oil flows into next year.
In its Oil Market Report for September, the IEA forecast global oil demand to decline by 2.5 million barrels per day (mb/d) in 2026, up 940,000 barrels per day from its previous estimate.
Global oil production fell by 1.6 mb/d month on month to 100.1 mb/d in August, as more than 10 mb/d of Gulf output remained shut amid heightened security risks, the report said.
Global observed oil inventories plunged by a further 95 million barrels in August, bringing cumulative draws since February to 507 million barrels, or an average of 2.8 mb/d. Oil-on-water volumes also declined by 65 million barrels as tanker traffic out of the Middle East came under renewed attacks.
IEA said benchmark crude oil prices surged to their highest level since May as negotiations between the United States and Iran to end the war in the Middle East remained at an impasse amid renewed hostilities.
Inventories have so far played a crucial role in balancing the market, the IEA said, while warning that buffers were shrinking and the global refining system was stretched to the limit. It stressed the urgent need to resolve the conflicts in the Middle East and the Russia-Ukraine conflict to prevent further tightening of the oil market and destruction of demand.
IEA cuts 2026 global oil demand forecast as Middle East tensions disrupt flows
