IEA cuts 2026 oil demand forecast again as Hormuz remains shut

The International Energy Agency (IEA) has significantly revised its 2026 oil demand forecast downward, citing ongoing disruptions in global oil supplies and high fuel prices. The Paris-based agency now anticipates a 4.3 million barrels per day (mb/d) average decline in global supply this year, following a 1.6 mb/d decrease since its previous July report.

This downward revision stems from the closure of the Strait of Hormuz, caused by the conflict between Iran and the US, Israel, and Saudi Arabia, as well as high fuel prices that deter buyers. Tehran has effectively halted tanker and cargo traffic in the strategically vital passage, which typically accommodates one-fifth of global oil shipments.

Despite a ceasefire and claims of a potential strait reopening, only a limited number of vessels have been permitted to pass, creating volatile oil market prices. Global oil supplies did increase by 2.4 mb/d in July to 101.5 mb/d, but that figure remains 6.3 mb/d below pre-pandemic levels. However, renewed hostilities and maritime disruptions in July and early August impeded recovery efforts.

The IEA now projects global supply to contract by 4.3 mb/d on average this year, before rebounding next year. On the demand side, the agency anticipates a resurgence in oil consumption in the fourth quarter of the current year.