IEA cuts 2026 oil demand forecast as Iran conflict drags on
The International Energy Agency lowered its 2026 global oil demand outlook by 2.5 million barrels per day, citing the ongoing Iran war and disrupted supply routes.
The Paris-based International Energy Agency revised its forecast for 2026, predicting global oil demand will be 2.5 million barrels per day lower than in 2025, a larger decline than the 1.6 million barrels cut in August. The agency attributes the downgrade to the stalemate in U.S.-Iran negotiations and renewed attacks that hinder the normalization of oil flows. Prices for crude have surged above $100 a barrel, and refined products, particularly diesel, have risen sharply, with U.S. diesel futures exceeding $200 per barrel.
The IEA warns that the Strait of Hormuz remains under Iranian control and Houthi advances toward the Bab al-Mandeb Strait further restrict supply, pushing full recovery of Middle-East output to 2027. It stresses that tighter refining margins and stretched global buffers make resolving the Middle-East conflict—and the ongoing Russia-Ukraine war—critical to avoid deeper market tightening.
Why it matters
Lower oil demand forecasts signal higher fuel prices and tighter markets for consumers worldwide.
In this story
