IEA sees world oil demand falling 2.6M bpd in 2026

The International Energy Agency has lowered its world oil demand forecast again. Its October Oil Market Report, released Wednesday, October 14, now expects global consumption to fall by an average of 2.6 million barrels a day in 2026, according to the Associated Press. The Paris-based agency blamed the war in Iran, which has limited fuel supplies, pushed up prices and weakened the economic outlook.usnews.com

The agency expects demand to fall 2.5 million barrels a day year on year in the fourth quarter, and diesel is set to make up about a quarter of that decline, the AP reported. Demand had already shrunk by 5 million barrels a day in the second quarter and by 3.7 million in the third, ThePrint reported.finance.yahoo.com+1

Diesel under strain

"Diesel markets remained under significant strain," the IEA said. Long-running supply disruptions forced stockpiles to be drawn down ahead of refinery maintenance season and peak winter demand, according to ThePrint. Global diesel exports fell by almost 700,000 barrels a day in September. Wholesale diesel prices reached about $220 a barrel in Europe and the US. The agency expects diesel demand alone to fall by another 1 million barrels a day in the fourth quarter.theprint.in

"Record diesel prices are already having broad economic consequences by raising the cost of goods and impacting real incomes, economic activity, and inflation," the agency said, as quoted by ThePrint. Diesel stocks lost during the crisis are unlikely to be rebuilt before the second half of 2027.theprint.in

Partial rebound in 2027

The IEA expects demand to recover by 2 million barrels a day in 2027. That would still leave global oil use 620,000 barrels a day, or 0.6%, below 2025 levels, APA reported. Supply is forecast to fall by 5.8 million barrels a day this year, to 100.7 million, before rising by 7.7 million barrels a day next year.en.apa.az

Production has started to recover. Global output rose by 2.5 million barrels a day in September to 102.3 million, led by Gulf producers. Saudi Arabia drove most of a 2.1 million barrel-a-day increase from OPEC+, the AP reported. Flows through the Strait of Hormuz rose to 10.9 million barrels a day. Global observed inventories, however, were still 509 million barrels below their level before the war, according to ThePrint.usnews.com+1

Prices and policy response

Brent crude rose on Wednesday morning. Over the past month it has moved between about $96 and nearly $110 a barrel, the AP reported. Governments have tried to ease the shortage. On Friday, October 9, President Donald Trump announced a deal with Russia to supply more than 300,000 tons of diesel to the US right away. A week before that, the Group of Seven said it planned to release 100 million barrels of oil and fuel products.usnews.com

The IEA warned that "renewed attacks in the Gulf leave the recovery fragile." It said that if supplies from the Middle East do not return, demand may have to fall further to balance the market, ThePrint reported.theprint.in