The IEA oil demand outlook has been cut sharply, with global demand now forecast to decline by 1.6 mln b/d in 2026, 510 kb/d more than last month’s estimate. The International Energy Agency cited the ongoing closure of the Strait of Hormuz and elevated fuel prices as key factors weighing on consumption.
Global oil demand fell by 4.9 mb/d in 2Q26, with the annual contraction expected to ease to 2.8 mb/d in 3Q26 before returning to growth in the final quarter. Global demand is projected to expand by 2.4 mb/d in 2027. The IEA expects 2026 demand to fall by 1.56 mln b/d YoY to 103.29 mln b/d.
IEA Oil Demand and Global Supply Outlook
Global oil supply rose by 2.4 mb/d to 101.5 mb/d in July, but remained 6.3 mb/d below year-ago levels, with 8.3 mb/d of Gulf output still shut in. Renewed hostilities and maritime disruptions in July and early August reduced projected 3Q26 oil supply by 1.7 mb/d compared with last month’s report. Supply is now expected to decline by 4.3 mb/d on average in 2026 and rebound by 8.3 mb/d in 2027 to 110.3 mb/d.
Non-OPEC+ output rose 590,000 b/d in July, led mainly by Qatar, while OPEC crude production increased by 1.5 mln b/d. The IEA expects non-OPEC+ production to rise by 690,000 b/d in 2026 and 2.5 mln b/d in 2027, while OPEC production is forecast to fall by 5 mln b/d in 2026 and rise by 5.8 mln b/d in 2027.
Refinery crude throughputs increased in July but remained nearly 5 mb/d below year-earlier levels at 80.9 mb/d. Global throughputs are forecast to decline by 2.5 mb/d in 2026 and rebound by 3.5 mb/d in 2027. Global observed oil inventories plunged by 69 mb in July, while total observed stocks stood at just below 7.9 billion barrels, down 410 mb since the start of the war.
Benchmark crude prices traded in an exceptionally wide range of almost $40/bbl in July. North Sea Dated rose by $25.67/bbl during the month to end July at $96.80/bbl, and was trading around $92/bbl at the time of writing. The IEA said restored flows through the Strait of Hormuz could shift the market from a 1.30 mln b/d deficit in 2026 to a 4.60 mln b/d surplus in 2027.
