The International Energy Agency cut its 2026 global oil demand forecast, now projecting an annual decline of 2.6 million barrels a day. It blames the Middle East war, restricted fuel supplies and soaring prices, with diesel the hardest hit.
The IEA now projects a 2026 annual decline of 2.6 million barrels a day in world oil demand, steeper than the 2.5 million-barrel-a-day drop it forecast last month. The agency cites the Iran war's disruption and soaring prices. Diesel alone will account for a quarter of the decline.
For the fourth quarter, demand is expected to fall 2.5 million barrels a day year-over-year. Even a partial rebound of 2 million barrels a day in 2027 would leave global oil use 620,000 barrels a day, or 0.6%, below 2025 levels, the IEA said.
Crude prices jump on pipeline attack
Prices have surged on the supply disruptions. North Sea Dated crude jumped $26.17 a barrel in September to $116.89, and was trading around $134 at the time of writing, a 43% increase since the start of September. Brent futures have risen 13% over the same period, to about $107.
The IEA pointed to the Sept. 11 bombing of the Saudi East-West Pipeline and a sharp rise in freight rates as key drivers of the rally.
Supply falls, diesel stays tight
Global production rose 2.5 million barrels a day to 102.3 million barrels a day in September, driven by Gulf producers. OPEC+ gains of 2.1 million barrels a day were led by Saudi Arabia, and the group's role is explained in the OPEC+ glossary. Still, the agency expects supply to fall by 5.8 million barrels a day for the full year.
Diesel remains under the most acute strain. Wholesale diesel prices hit all-time highs near $220 a barrel in Europe and the U.S. in September, nearly double crude oil prices. The IEA said restricted middle distillate supply is "likely to persist well into 2027".
Inventories drop as risks persist
Global oil inventories fell 10 million barrels in September, leaving stocks 509 million barrels below pre-war levels. The IEA sees world supply running 1.73 million barrels a day below demand in 2026, and says any surplus is unlikely to emerge before 2027.
Source: Investing.com
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