Economic Buzz: Global oil demand expected to decline in 2026, says IEA

The International Energy Agency (IEA) estimated on Wednesday in its monthly report that world oil demand will decline by 1.6 million barrels per day (mb/d) in 2026, 510 thousand barrels per day more than the estimate in July's report.

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 undermined the recovery efforts, reducing projected 3Q26 oil supply by 1.7 mb/d compared with last month's report. Global oil supply is now projected to decline by 4.3 mb/d on average in 2026 and rebound by 8.3 mb/d next year to 110.3 mb/d, the IEA stated.

Moreover, the agency added that global oil demand for 2027 will be 2.4 mb/d higher than earlier estimates of 1.9 mb/d and noted that elevated fuel prices are currently weighing on oil demand.

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